(Updated 23-May-2015. This worksheet might be useful for people to analyze factors raised in the current public debate about underlying causes of housing unaffordability. The original post was on CityHallWatch on 23-Oct-2014, during the civic election.)
With the civic election approaching, Vancouver’s housing unaffordability is at the top of many debate agendas. It’s the talk of the town and has been for years. COPE, the NPA, and Vision Vancouver have all had time at City Hall, with Vision Vancouver having the majority for the past six years. In fact, they got the majority — twice — promising to handle homelessness and housing unaffordability. Of course, the issues are complex. The causes are complex. But neither the politicians nor the experts have presented to the public a convincing or concise way to understand the problem.
So we tried a thought experiment. We created an Excel sheet and a radar graph, listing these factors, which anecdotally seem to be major causes of housing unaffordability. (Download our Excel file and try changing things yourself: Concept-major factors in housing affordability) These are the factors we listed.
- Empty units
- Inherent land scarcity
- Tight demand vs supply in housing type
- Foreign ownership
- Global economics (safe cash refuge)
- Industry hype, psychology
Then we punched in some numbers as a guestimate of the relative influence of each factor, based on sense and reading. The total adds to 100. We also created three columns to indicate which issue can be handled by which level of government (see asterisks). The result is the radar graph you see at the top of this article.
Granted, this was a quick effort and everything is worthy of more careful thought. But with some more input and references, we could probably get a pretty good summary. What would it take for the experts to present information in this way for the public? This would also make clear where governments have authority and jurisdiction. And it could help voters cut through the slick promises of politicians hoping to get elected. Each factor could be isolated better and discussed.
Barbara Yaffe in The Vancouver Sun wrote (pD2) on October 22 (Real estate forecast to stay hot into next year: report) quoted the Real Estate Trends 2014 (by Urban Land Institute and PricewaterhouseCoopers) as saying Vancouver “does offer … a place for the world’s super-rich to park sizable funds in local real estate as a hedge against risk.” And notes that foreign buyers, mainly from Hong Kong and China, account for the purchase of about 40 per cent of luxury homes and are “one of the key reasons real estate prices continue to rise.”
We have seen estimates by experts that this source of capital could be inflating house prices in Vancouver by 10 per cent. But politicians have been looking the other way. Intentionally.
At the “End Homelessness Now: Mayoral Candidates Debate on Homelessness and Affordable Housing” on November 7, 2011, at St. Andrew’s-Wesley United Church, Vancouver, both mayoral candidates Vision Vancouver’s Gregor Roberton and NPA’s Suzanne Anton showed they would not address the issue. See this YouTube video, Q&A for Robertson and Anton starting at 19:46. Panelist/reporter Frances Bula asks the two mayoral candidates:
“Would you support any kind of speculator tax or limit on offshore buyers of residential real estate?”
For exactly that 20-second spot, click here:
NEW: Concept of a worksheet for systematic analysis of what can be done by three levels of government. Fill in the blanks with your own ideas.
|GOVERNMENT ACTION / RESPONSIBILITY / OPPORTUNITY|
|Global money flows||E.g., Use tax system stop bogus claims of residency, forcing foreigners to pay capital gains tax when they sell a home in Canada|
|Lack of information on property transactions||Enforce the federal Proceeds of Crime (Money Laundering) and Terrorist Financing Act|
|Quick flipping of property|
- Real estate associations: More aggressive education and enforcement of rules on reporting of suspicious and large transactions. Adopt a zero tolerance policy. Enhance monitoring. Cancel realtor licenses for violations. Cooperate with federal and law enforcement agencies on all of this.
- Law enforcement agencies:
- Think tanks and consultants
- Academic institutions