In the last week, the need for answers about Vancouver’s increasingly freakish real estate market has reached a fever pitch.
The need for action is particularly dire after a succession of revelations: The Globe’s investigation this week of the legal but controversial practice of contract assignment that has seen some real estate agents make windfall profits by selling and re-selling the same home. The appearance of crowdfunding firms targeting Vancouver property. The demolition of newly renovated mansions. And the finding that there’s been a 39 per cent increase in the number of $2 million-plus homes in the last year. No wonder the New Yorker is about to publish a story on the huge impact of Mainland Chinese wealth on Vancouver.
Vancouver real estate feels like the Wild West – at the mercy of the open market and overrun by greed. And the failure of government to intervene and take leadership over the situation in a meaningful way, one that has the best interests of all its citizenry, is “shocking,” as University of B.C. geography professor David Ley puts it.
“We are in a largely unregulated situation, and these irregularities that come up from time to time show just how unregulated it is,” says Mr. Ley, who’s been studying global real estate buying for the last 16 years. He recently released a new paper, Global China and the Making of Vancouver’s Residential Property Market, for the International Journal of Housing Policy. He is working on his second book on the topic, about housing bubbles in gateway cities.
“I would say no one is looking after the citizen,” he says. “A market such as this leaves itself open to incredible opportunism, and on occasion that is going to cross over into criminal behaviour. Why should we expect anything different?”
The median income for a 25 to 55 year old with a bachelor degree here is $41,981. That group is not driving the average detached Vancouver house price to $2.53-million.
And yet, the only people currently supplying data on the issue have been academics, independent analysts, the media, bank economists and real estate agents. The provincial government has insisted that its hands are mysteriously tied when it comes to acting on foreign ownership because there is no data to prove that it’s a problem.
I contacted the former registrar and director of the land titles office, Ian C.B. Smith. Mr. Smith, a lawyer who spent 23 years as registrar of land titles. He told me that for more than 20 years his office quite easily collected citizenship data for the entire province. From 1978 to 1998, legislation required a statement of citizenship to be filed with every property transaction registered with the land titles office.
“Presumably, somebody wanted to know what the ownership stats were at the time, and whether people were British Columbians or Canadians or from other nations.
“The [forms] were generally drawn up by the lawyer or notary doing the transaction and they were always witnessed as well.”
There was a form for an individual and another for a corporation, so if it was a numbered company it had to disclose the name of the director.
The forms were stored in numbered files and put in boxes.
“They just sat there until it was realized that they were taking up a lot of space, because there were millions of them over the course of 20 years,” says Mr. Smith.
Legislation to collect such data was repealed, and the documents were destroyed.
He’s not sure why the data was collected since it was never tabulated. But it was done, and in this digital age, it could be done even easier.
“It’s not rocket science,” says Mr. Smith. “They could reintroduce it. It’s a question of political will, I think.”
And if the province were to begin collecting the data again?
“With all due respect, that would be a real step forward for this government.”
The province could re-enact the statement of citizenship form, which was obviously a formal document. But Ministry of Finance Senior Public Affairs Officer Brennan Clarke told me: “All I can tell you is that change is being considered and note that what’s under consideration is simply a change to an application form.”
He also mentioned the study on foreign home ownership that’s been ongoing by BC Housing, and is expected to be complete in five months. Part of that research includes looking at how other cities are addressing the influx of foreign money.
“In the last two weeks in the U.S. now they are looking very seriously at money laundering in New York City and Miami, and depending what they find there, they will broaden the net,” says Mr. Ley. “London also is very attuned to money laundering and has passed some laws to try to force disclosure of offshore buyers in particular.”
But BC Housing has indicated to Point Grey MLA and housing critic David Eby that we might never see that data.
“It is premature to say if the research will be made public,” his office was informed in a letter by Deborah Kraus, Manager, Research, BC Housing.
The secrecy around what should be public information is creating a serious lack of confidence, which is, politically, a bad move.
“So the province is controlling the information, and it has also said they reserve the right to keep their research private,” says Mr. Eby. “This is public data. I’ve never heard of a census being confidential.”
Pressure is also on for the government to cool the market, particularly with the budget reveal on Tuesday. One obvious option is an increase in the property transfer tax for high-end properties.
“Something very easy to do is revise the property transfer tax. And follow the path of the other cities and London in particular where it is a graduated tax, and in essence a wealth tax,” says Mr. Ley, whose idea has been echoed by many others. “A tax that at the bottom is zero for lower priced properties, and for higher priced properties, I would like to see it go up 10 to 12 per cent.
“I doubt whether the government would do that. My concern is if they do – and [finance minister] Mike de Jong has hinted at it – it will be nominal. Maybe 4 or 5 per cent.”
Real estate agent Bryan Yan believes a lot of the buyers of high-end properties are non-residents and the government should charge them a transfer tax of 25 per cent. He’s been selling west-side properties since 1994.
“It’s a moving locomotive and it can’t stop, and it’s too powerful because there’s that much money coming here.
“I definitely feel you have to level the playing field. It’s not fair right now, completely not fair.”Report Typo/Error