The reports keep coming in on the most important and least-addressed issue in Vancouver: housing. In addition to the usual questions about who is buying and how, the discussion is beginning to focus more on consequences and the lack of response by senior governments.
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Today in The Sun: BAGS OF CASH: FICTION, NOT FACT
“The part that worries me is that since 2013, there has been an intensifying of capital flow leaving China,” says Peter Routledge, managing director of financial services research at National Bank Financial. “Folks call this ‘hot money outflows.’ The problem is if it turns cold and you don’t see it coming.”
He emphasizes there is no way to say or predict when this will happen. Expert opinions differ, but if anything, “it’s a very stable market and no evidence capital flow is going to stop.”
And if home values do drop, he thinks Canadian banks lending to buyers of homes in the three west-side neighbourhoods would be reasonably well covered. Based on his rough sketch of the high-net-worth client putting down $1.5 million for a house and another $1.5 million in an investment account with the bank, it would take a 50-percent fall in the value of a house for the bank to lose.
The greater danger for the banks, says Routledge, could come “from the thousands of other mortgages made by the banks to people with local salaries.”
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Today in The Province:
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From the Globe: Vancouver house-buying frenzy leaves half-empty neighbourhoods
Vancouver’s mayor is speaking about the issue more critically than he has before – particularly about how some speculators may be avoiding federal taxes. …
Vancouver’s mayor also wants the B.C. government to bring in a tax on speculators who “flip” those homes within a year or two. So far, he said, B.C. Premier Christy Clark has been “slow to react.”
“It’s irresponsible government when the system is not fair and wealthy people can capitalize on that without contributing their fair share – and housing affordability is impacting everybody else,” Mr. Robertson said.
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And yet, the response from senior governments: Crickets.
If there are two issues that senior governments have responsibility for, they are housing and transportation. And yet, the strategy of the last two decades has been to transfer more obligations to local governments while, as much as possible, avoiding political responsibility. The federal government got out of housing in the mid-90s, and the B.C. government has essentially dumped transit onto Metro Vancouver taxpayers, who have, thanks to the Premier’s referendum gambit, indicated their unwillingness to pay.
The result: senior governments don’t even want to talk about these issues, much less take on any responsibility for addressing them
Here’s a quick checklist.
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TRANSPORTATION
- Request from TransLink for a vehicle levy. Provincial reponse: Twice no.
- Request from TransLink for a parking charge. Provincial reponse: No.
- Suggestion from region for a carbon tax reallocation. Provincial reponse: No.
- Suggestion from region for a regional carbon tax. Provincial reponse: No.
- Suggestion for new governance structure for TransLink. Provincial reponse: No.
- Need for new funding to match senior government commitments. Provincial response: Not without another referendum.
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HOUSING
- Request for new non-market programs. Provincial and federal responses: Repeatedly no.
- Request for rental construction assistance. Federal response: Repeatedly no.
- Suggestions for restructuring property tax. Provincial response: No interest.
- Request for speculation tax. Provincial response: No.
- Request for more data. Provincial response: None. Federal Conservatives: $500,000 study. No indication from Liberals.
- Suggestions for non-resident taxes on housing purchases. Provincial and federal responses: None.
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That was just off the top of my head. Additions welcome.
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Oh, I can’t forget this. Collected comments on the housing and transportation issues by Vancouver’s Liberal MLAs:
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To be fair, why should senior governments lift a finger so long as municipalities insist that most of their area should be legally reserved to low-density housing? “We want you to do stuff for affordable housing while we systematically prevent housing from being affordable”
Sam Sullivan brought up the supply issue in the Legislature the other day
And if you forbid foreign buyers from owning, the supply available to Canadian residents would go up too.
In one beautiful sentence, you invoke the free-market ideals of supply and demand, and you cut them down based on some artificial notion of us and them.
“Capitalism rules! But not for you, my friend: you’re not from here.”
Well done indeed.
free markets are taxed … and just like the free market of transportation is agreed to include parking fines to tax the use of certain spaces which have high externalities (location, demand, etc), certain taxes could be applied for parking money without a corresponding parking of body and spending – so in the same way also with high externality.