Vancouvers’ “Wild Wild West” Real Estate Market….Is it time for government intervention?

A new Insights West poll certainly suggests people here favour some government intervention.

Everybody has a real estate anecdote about housing prices gone wild in BC. Everyones neighbor, cousin, friend, uncle got an amazing price for their run down home they purchased for what is noe quite possibly …Mere pennies, 30 years ago.

Insights West asked Vancouverites this month about a recent debate over levying a tax on people who acquire properties in Vancouver but do not live in them. The idea was extremely popular, with 72 per cent of respondents calling it a “very good” or “good” proposal, and only 18 per cent deeming it “very bad” or “bad.”

Support for such a levy was high across genders (75 per cent for women, 70 per cent for men), all three age groups (from a low of 70 per cent among those aged 55 and over to a high of 76 per cent among those aged 18-34) and all three household incomes brackets (80 per cent in the lowest bracket, 66 per cent among those in households earning $100,000 or more a year).

While we may be unique in Canada, another world-class city is actively looking for ways to deal with empty homes.

New York City, governed by a Democrat for the first time since 1993, is considering a tax on non-resident owners. Mayor Bill de Blasio — elected on a promise to deal with what he calls the “inequality crisis” — is pondering the levy, which would be applied to anyone who spends less than half the year in the city and owns a property appraised at more than $5 million US.

While I have nothing against capitalism and free enterprise….Is this rabid escalation of housing prices in Vancouver even remotely sustainable?

Prices have escalated to the point where those who might consider selling do not, for fear of not having affordable alternative housing to turn to. After all, if you sell for $1.5m, the only housing option available might be $1.3m unless your reasons for selling include downsizing or moving way out of the city. Maybe even moving to Prince Edward Island where you could buy entire communities with your windfall.

Thus, Vancouver has a shortage of homes for sale. In the existing seller’s market, some buyers bid wild sums for existing property, putting upward pressure on prices.

Now, it is true that the region’s economy is performing well at the moment, probably better than any other metropolitan area in Canada. But few Vancouver-area residents got 15- or 20-per-cent pay raises in the past year.

Median family income in Vancouver in 2013, according to Statistics Canada, was $73,390. An income of about $150,000 is required for mortgage payments on an $800,000 Vancouver home.

That this affordability crisis has gone unaddressed reflects the fact that an overheated market serves the interests of the real estate industry, loving those commissions, and government, raking in property-related tax revenues.

Runaway pricing also works in favour of owners with home equity. It is regrettable that fetters are needed on what, ideally, should be a free and open property market. But with housing out of reach for too many in the region, it is time for government intervention.

Why not follow in the footsteps of the Asian countries where these wealthy investors originate?.

Hong Kong tax costs including the stamp duty, property tax on rental income and profits tax on the disposal gains, equate to approximately 22.4 percent-23.2 percent of the property price in year five, making tax costs on buying a luxury property one of the most expensive in the world, according to the report. The most significant part of the tax cost is the 15 percent Buyer’s Stamp Duty (BSD), which is only chargeable for non-Hong Kong permanent residents and corporate buyers.
Now Ms Clark and Mr. Robertson.. there’s one solution for you?