September 14, 2017

Housing Affordability: More Voices

Following the platform announcement by the NPA civic by-election candidate (who wants to see Vancouver-wide rezoning and higher housing density everywhere) more council candidates have joined the call.
So far, the calls for an end to Vancouver’s exclusionary zoning seem to be edging upward among many other ideas about improving housing affordability. There is also a steady drift towards improving availability and protection for those who prefer to rent.
With thanks to Mike Howell in the Vancouver Courier:
First: Pete Fry of the Green Party wants inclusionary zoning, plus support for renters:

 . . . the party’s housing plan is focused on what can be achieved with existing tools at city hall. He, too, advocated for inclusionary zoning to create affordable housing and tie that type of housing to median local incomes.
Other measures include creating a city tenants’ office to support tenants and prevent “renovictions” and short-term rental conversions, provide incentives to build “truly affordable purpose-built” rental housing and streamline building codes and zoning bylaws to develop more forms of housing, including townhouses and row houses. . . .
Fry said the Vancouver Greens would work with their provincial counterparts, which struck an agreement with the ruling NDP government, to create strategies to address speculation on real estate and build more public housing.

Second:  Judy Graves of OneCity wants new zoning city-wide, new taxes on the wealthy and on speculators, and income-based controls on rents.

Graves proposed a luxury property tax of 1.5 per cent on the wealthiest one per cent and 0.5 per cent on the wealthiest five per cent of residential property owners. She also wants all city-owned rental buildings to be rented at 30 per cent of a tenant’s income.
Creating a “flipping levy” to target speculators and opening up all neighbourhoods to inclusionary zoning, an approach that would tie affordable housing to a new development, are other ideas that Graves rolled out Tuesday as part of OneCity’s housing plan. . .
Although the party has described the plan as “made-in-Vancouver,” Graves acknowledged creating a luxury property tax and flipping level would require approval of the provincial government.

Third: Vision’s Diego Cardona puts his early focus on renters:
1. Putting the first $500,000 in excess revenue from the empty homes tax towards the Vancouver Rent Bank, which helps renters in crisis and prevents homelessness.
2. Creating a ‘Renters’ Advocate’ at City Hall. This position would be the City’s point person when dealing with the Residential Tenancy Branch, and help support renters when dealing with illegal evictions.  . . .
3. Advocating for more pet-friendly rental housing. . . .
4. Diego will support Vision’s advocacy to the BC government and will continue to stand up for renters by working to stop unfair evictions, go after bad landlords, and make life easier for renters with measures like closing the fixed-term lease loophole in the Residential Tenancy Act.
[Ed. my apologies for the partial post of this early today. Workers cut our electricity without warning this morning, and somehow WordPress posted my ab initio draft. I did not find this out until later when I dragged my portable to the local coffee shop].

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Leave a Reply to Alex BottaCancel Reply

  1. Restricting renovictions makes sense, for example one year notice and three month rent payment to tenants. To improve old housing stock one needs capital and incentives to do so.
    One year lease rollover loophole ending also makes sense.
    If 25-30% rentals are forced onto new developers – especially when at below market rents – the remaining 65-70% will be even more expensive.
    Every action has a reaction. More restrictions and taxes do not increase supply, they decrease it.
    Entitlement mentality needs to be addressed, too as Vancouver will never be cheap again. Affordability has to be seen in a MetroVan context. Where is this voice of reason ?
    With already announced higher income taxes, corp taxes and CO2 taxes BC is getting less and less competitive as an investment destination. Real estate and immigration are the only last legs standing. If policies meddle too much with real estate profitability that strong leg will collapse and supply even tighter !!
    BC ought to look south to our neighbor in Washington state ( or Texas ) and eliminate provincial income taxes. Then – and only then – should higher real estate taxes be considered.
    See also my comments on ” more honesty, please ” here https://pricetags.wordpress.com/2017/09/12/provincial-affordability-initiative/#comments

    1. Thomas, it seems that even a 50% correction of SFH prices in Vancouver would not create affordability for working and middle class people in this city. If the realities of land price, putting building cost to one side for a moment are simply too high for ownership affordability perhaps that is not a realistic pursuit.
      Public resources are limited, perhaps its time to concede that with growing inequality we need a two tier housing market policy, rather than one based on the old model of a large working and middle class. Focussing on increasing market and non market rentals ensures that Vancouver remains affordable for enough working people to provide demographic diversity, and the SFH ship that has already sailed for the vast majority can sail even higher, or someday crash and burn the way some people believe that it will.
      Non market housing tied to a percentage of income would give security of tenure and cost for working people, and free up disposable income that this economy needs. It would ensure that necessary police, fire, medical and other working categories will increasingly be filled by local residents, reducing commuting pressure on our inadequate transit and road systems.

      1. The money is simply not there to provide free land or massive subsidies for tens or hundreds of thousands of subsidized units.
        Vancouver housing affordability has to be seen in a MetroVan context. Vancouver is not an island.
        Massive immigration with super low taxation of real estate and 50% of incomes also play a huge role here as Canada sells itself far too cheap to foreigners especially those with money. Most immigrants want to own. Great. Make them pay for the privilege. If we followed WA or TX models, specifically zero income taxes but very high consumption and real estate taxes, coupled with deductibility of mortgage interest for resident tax payers we’d actually level the playing field. Today far too many folks mooch of the free healthcare and education yet pay next to nothing in taxes. Failing that, locals with modest incomes simple get screwed, yet no politician likes to acknowledge it. We need far more radical taxation solutions to address this imbalance.

        1. When I speak of public resources, I am hoping for a serious amount of federal, provincial and city money focussed on the non market housing sector. They managed it in Whistler with very costly land prices, but they weren’t 100% built out at that time. I’m told the public housing in Vancouver is 5% of the stock, vs. New York at 10% and Stockholm at 30%. I believe it is something that we should strive towards.
          The CMHC dropped out of coop financing more that 20 years ago under the Chretien Liberals, they were apparently building 25,000 units per year. I believe that a serious commitment by all three levels of government would make a difference. That said, I am not an expert on land/building costs.

        2. Land costs now huge in Vancouver. Huge. Cheaper further out. Thus, start there. Is it below people’s dignity to rent in New West or Burnaby but work in Vancouver just because you were born in Vancouver?
          Forced 25-30% of new development to be rentals will help renters but will drive ownership costs of the other 70-75% even higher. Rezoning along arterial will help as does more rapid transit. There’s no free ride here. Expectation too have to be reduced. Many will never own in MetroVan. Just admit to it. Far too many lies and broken promises.
          ==> Addressing rental crisis far more critical than ownership. Vancouver on the right path here with forced 25% rentals, but not enough. Many levers have to be moved. Taxes. Land grants. New land. Faster approval cycles. Slimmer building code. Immigration. Rapid transit. Laneway houses. Road tolls.

        3. Land costs now huge in Vancouver. Huge.
          The city has a large land bank. Use it already for a new model of public rental housing in sufficient numbers to offer an alternative to ownership of more expensive private units.

  2. While there is certainly room to rezone to add more variety in housing stock, this rush to blame “exclusionary zoning” is a cop out. The real issue is how did various levels of government allow a SFH anywhere west of Cambie to get to be $2 – 5 million dollars?! It is not local wage growth that drove that insane price run-up.
    You cannot blame population growth. Canada’s greatest source of immigrants is the Phillipines and I know all those new arrivals are struggling with our crazy housing prices as much as everyone else. There needs to be meaningful restrictions on who can buy Canadian property. Across the western world we see again and again how residents of authoritarian regimes, which disrespect the environment and labour, are allowed to waltz in and buy property unchecked. This needs to stop.

    1. One of the biggest — and most silent — influences on prices is the geometry of zoning on a limited land supply. You can’t get around the fact that 30% of all housing occupies 80% of the private residential land in this city. Exclusionary zoning CAN be blamed for its willful ignorance on land planning. To expect land-hungry detached homes to come down in price on a constrained land supply is just magical thinking.
      And since when did the west side of Vancouver speak for the remaining 95% of the Metro?

      1. OK, Alex how did the base price of an East Van home get to be $1.5 million, when 10 years ago it was $500k? And the same for prices in Richmond and Burnaby. In Pricetags post the day before, Andy Yan once again points out how prices have become detached from local incomes. That is the real problem.

        1. It has detached because we are measuring the wrong thing. Local incomes don’t matter when a lot of income is not declared or hidden in equity in untaxed real estate gains. US requires world income declaration for a reason, it allows locals an advantage by deducting mortgage interest from incomes and it taxes real estate quite high. We do the opposite: we penalize incomes and tax real estate far too little. We ought to monetize real estate ownership and reduce or eliminate income taxes. Look to WA or TX how they do it.

      2. ….how did the base price of an East Van home get to be $1.5 million, when 10 years ago it was $500k? And the same for prices in Richmond and Burnaby.
        Through the same mechanism detached homes on large lots became $3 million on the west side. The effects of limited land availability are affecting prices along with other influences, like cheap mortgages, foreign money and local speculation.
        According to the census, Vancouver’s population grew by 53,445 people in the decade 2006-16. That translates into 24,300 additional homes in the city. It doesn’t take a PhD in physics to understand that there isn’t 9 km2 available to ensure all those homes were detached.
        The detached home on a large lot is obsolete. The sooner local planners and politicos admit that, then the sooner more affordable homes can be built on the same land area. The detached house is not a standard that can be used any more here.
        The list price per m2 will always be higher on the west side than the east, and it usually goes up when a parcel is developed. There are variations in pockets in every other city in the Metro. However, the home list price will always be lower with attached infill housing using less land than a detached home using more. Two standard lots could be subdivided into 7 rowhouses with rental suites. Condos and rentals are obviously always more affordable than the detached home.
        The other way to close the gap is to increase average household incomes. One way of achieving that is to build rental suites into new infill townhouses and rowhouses. One-income households become two-income, and two-income households become three.

        1. The housing supply has gone up at a faster rate than population. Stats show permits issued for 49,753 units from 2007-2016, far in excess of what you claim is needed. Supply is NOT the problem the developers who Vision and the NPA would have you believe it is.

        2. Those units were not all new units. A hefty number of them were replacements several orders of magnitude greater (land assembly, demolition, build new)
          You keep citing unaffordable SFD housing prices as though a 4,000 ft2 lot with a house on it would plummet back down to 1999 prices if just the right anti-immigrant, foreign money and speculation policies were enacted.
          Ain’t gonna happen, Bob.
          Remove all the speculation and funny income stuff and you’ll likely discover that most of the land price will remain true value that reflects: (i) that it is rarer than it was; and (ii) there is too much waste of it under current zoning laws. Cheap money is also driving speculation. Do think UDI-affiliated developers would sell units if people weren’t buying? Developer shenanigans like reserved presales are also contributing, but that’s limited to the under-construction high-density condo market and has very little to do with the inability to provide the Missing Middle.
          The NDP are working on legislation to limit foreign income trusts and just announced that their political donation policies will be extended to municipalities too, which will take big developer money largely out of the picture. The Vancouver Charter is still under provincial authority. The CRA is also beavering away on income trusts and is cooperating on federal immigration policy, but that one needs to be done with great care because immigration is vital to the nation’s future.

        3. The other, perhaps larger factor is that those permits were approved largely for non-residential land. Car lots are prime targets these days along arterials for rezoning applications mid and high-rise development.

        4. Alex, you seem to be trying very hard to argue foreign buyers aren’t the biggest factor in making SFH unaffordable for Canadians. This is simply untrue, when price become detached from local incomes, look to those who have the income to afford them.
          https://beta.theglobeandmail.com/opinion/why-wont-trudeau-stop-real-estate-scammers/article36351746/?ref=https://www.theglobeandmail.com&service=mobile
          I’m all for rezoning once we have stopped the illicit flow of foreign money and proven there is truly a need for all those extra units.

  3. Supply, supply, supply…. Governments can assist, but there will never enough of other people’s tax dollars to build subsidized housing with our education, social support, and aging society’s needs. Government’s role should be to create the environment that allows citizens to create the housing that we require…

    1. Exactly. Look to WA state or TX how to do it:
      A) tax worldwide income
      B) allow mortgage interest deductability
      C) eliminate provincial income taxes
      D) tax real estate far far higher while holding
      E) include real estate gains in income
      Failing that, any smart local with money or certainly any wealthy immigrant buys the biggest house they can afford and declares incomes elsewhere while mooching off free healthcare and education. It’s the rational choice. Locals with modest incomes get screwed as a result. That is BC for you for the last 30+ years.

        1. Widely (ab)used by (wealthy) immigrants. Offshore corp or husband has large income, wife and kid(s) get minimal living stipend .. cash wired in tax free (“gift”) buys massive house or cars .. hence all legal. Done daily in Canada by thousands .. or do you honestly think houses or condos for $2-6M are paid by people making $100,000 in Canada ? See also here http://www.vancouversun.com/business/Part+Ritzy+Richmond+neighbourhood+where+many+poor/11136169/story.html
          Each kid and the wife has a house or condo whose gain is tax free now, and where healthcare and education is free.
          Hence my repeated commentary on taxing real estate higher and incomes far far less, or not at all, like TX or WA state !

        2. So, you are not calling for a rethink of the tax structure, but simply enforcement of existing laws? That doesn’t come across in your (repeated) comments.

        3. Both, Jeff. We tax incomes too high (up to 50% for high income earners) and holding properties too little and gains on personal residences not at all. As such, wealthy individuals, (foreign) investors and/or immigrants do the rational thing and shift incomes abroad and buy the biggest house/condo they can afford. That is not great social policies nor does it foster job creation. We ought to learn from TX and WA.
          Also much real estate related tax evasion, besides pure tax avoidance, with very very poor enforcement.

  4. There are so many things that cannot happen – only in one province, while not being suitable or wanted in another.
    This explains just one aspect :
    http://pacificimmigration.ca/practice/immigration-vancouver/
    It’s like thinking that you’d like to move to France, and the French government has a programme that allows you residency if you invest a few hundred thousand Euros in a Paris based business organization. You get in and get your papers but you buy a home on the Mediterranean Riviera, because that’s where you really want to live.
    The Riviera is teeming with not only the French but the Belgians and the Dutch, as well as the Brits, the Germans and the Russians. Everyone seems to be in a convertible BMW on their way to a tennis game. Naturellement, nothing is cheap.

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