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As prices continue to soar in Vancouver's infamous real estate market, a bold new solution has emerged to cool down a crisis that is driving young people deep into debt and forcing thousands of families to flee.
But Vancouver-based economist Marc Lee says the key question is whether elected officials have the political will to fix the sizzling market.
The city's housing market is broken, he said bluntly after releasing his new report on tackling its housing affordability crisis Wednesday morning. Yet as far as the author is concerned, the real heart of the issue is overcoming vested interests in real estate and property development industries.
"My sense is that Premier Clark is not interested in really addressing affordable housing, or maybe she wants to appear to be addressing it," Lee, who does research for the Canadian Centre for Policy Alternatives (CCPA), told National Observer. “All of the things they’ve been saying in terms of wanting to preserve the windfall gains that have occurred in the property market suggest that they're not serious about affordable housing.”
Since 2005, real estate boards, associations, and corporations have donated more than $360,000 to the BC Liberals, while real estate property and development groups have donated a whopping $2.8 million. Premier Christy Clark's own party fundraiser is Bob Rennie, owner of Vancouver's largest real estate market firm, whose company has shelled out over $250,000 to her party in the last six years alone.
It's no secret that the BC Liberals oppose any move to ban such large corporate donations to their party, and as a provincial election inches closer in spring 2017, Lee hopes the government will show Vancouver constituents it genuinely has their best interests at heart.
An integrated approach to affordable housing
Lee's new report, "Getting Serious About Affordable Housing," challenges both politicians and members of the public to engage in a broad discussion about the impact that unaffordable rental and home ownership has on social equality.
“A key recommendation is to take external capital out of the game," he explained, "be it overseas money or money from Alberta for that matter. [We need to be] putting the breaks on that and slowing down the non-resident ownership."
Lee’s study, conducted over many months including a review of other research papers, found that the top 20 per cent of Vancouver households hold 70 per cent of the net worth of principal residents. Foreign ownership in the city (much from Chinese investors) has long shut local residents out of the housing market who are unable to compete with wealthy speculators and low interest rates.
The economist further advocates for public investments of up to $2.5 billion per year to build 5,000 to 10,000 units of affordable housing and exploring affordable ownership models that include limits on resale prices. The latter has been successful in the nearby resort town of Whistler, B.C., which struggles to find affordable housing for its resident workforce.
Lee also proposes a series of progressive tax reforms similar to those of London, England, where property transfer taxes are added onto purchases by non-resident buyers, second homes, and rental properties.
“We’ve had a lot of discussion around homelessness in Vancouver, but I think what the tipping point has been is that now the affordability crisis is really reaching into the middle class," he said. "Homeowners see their kids contemplating leaving the region or feeling that they won’t be able to afford property down the road.”
Housing an election issue
The ability of B.C. politicians to act on reports like this one will undoubtedly be a determining factor in the upcoming provincial election, and according to NDP housing critic David Eby, his party is prepared. Party leader John Horgan has proposed a sound platform on the issue that includes closing the loopholes on "shadow flipping," and keeping a track record of those buying homes in the province to ensure offshore buyers are paying a higher tax.
Extra revenue from these measures would be poured into an affordable housing fund, Eby explained, for affordable housing initiatives in the region where it was collected.
“I think it’s fascinating that it doesn’t matter where people are on the political spectrum, they’re calling for government to get involved," he said. “I’m astounded we are building a consensus between some economists for the largest bank in Canada, the Business Council of British Columbia, and the CCPA on an issue where the government still refuses to acknowledge that there’s even a crisis."
In the B.C. Legislature earlier this month, Eby challenged B.C. Finance Minister Mike de Jong to take action on housing affordability in the city. Eby cited report from Simon Fraser University that concluded international speculators were the main factor driving the city's "out of control" real estate prices. De Jong responded by dismissing the credibility of the report's author and indirectly supporting the luxury investment market. This drew jeers of laughter from his peers:
"We're actually proud of the fact that we have a jurisdiction in British Columbia that people want to come to, feel they can succeed in, and want to invest in," he said.
The finance minister has a personal stake in at least seven investment properties in Abbotsford, roughly an hour outside of Vancouver.
The BC Liberals have previously come under fire for failing to take the housing issue seriously, and in a CTV interview in January, Clark suggested residents who are concerned about affordable housing in Vancouver should move north to places like Prince Rupert and Fort St. John.
The party did not respond to requests for comment on this story in time for publication, but its previous initiatives to tackle Vancouver's housing crisis include new rules to end the practice of realtor shadow-flipping, a homeowner's grant reducing the amount of property tax paid for a principal residence, and investments of more than $350 million to create roughly 2,000 new affordable housing units across B.C.