Vancouver's mayor wants developers to give locals the first chance to buy pre-sale condos before they are opened up to offshore buyers.
Mayor Gregor Robertson is expected to table a motion at a city council meeting next week asking staff to develop a policy that would ensure local buyers get first crack at presales. Developers use presales to generate bank financing for a building before construction starts.
The announcement, communicated through a city-hall news release, received a mixed reaction, with the development industry dismissing it as poorly conceived.
The news release suggested a deal West Vancouver worked out with developer Westbank Corp. last year might be a model.
It required sales to be restricted to West Van residents for 30 days, then Metro Vancouver residents for the next 60 days, that bulk sales be prohibited, and that buyers sign declarations saying they will live in the building.
"We want young people and families to put down roots in the city," the mayor said in the release. "This motion will support that by helping make sure people who live and work here get the first opportunity to buy into new developments in Vancouver."
The mayor's initiative comes as the city's housing crisis accelerates, with speculators buying up new condos, rents rising rapidly, a near-zero vacancy rate, and costs for housing, especially single-family homes, so high that a recent RBC market report said home ownership in Vancouver is out of reach for most residents.
Jon Stovell, the chair of the local Urban Development Institute, called Mr. Robertson's move "ill-thought-out" and unlikely to solve any of the city's housing problems.
Mr. Stovell, whose company, Reliance Holdings, is building a large tower on Burrard Street in the city's downtown, insisted most presold condos are going to locals already.
Several developers have said the same thing after realtors and anonymous Twitter critics accused them of marketing their condos overseas, sometimes before offering them locally.
Mr. Stovell noted that banks will not include offshore sales in their calculations when determining whether a project can get financing, which provides a brake for that kind of activity.
He said the city would do more to improve housing conditions if it could speed up the permitting process so things could be built faster instead of piling on more regulation.
But Green Party councillor Adriane Carr said she believes sales to offshore buyers truly are a problem for local housing and she supported the move.
"I've had e-mailed to me the screen shots about overseas sales," she said. "They advertise the condos overseas before the condos are offered for sale here, and it absolutely fuels the speculative market."
Councillor George Affleck of the Non-Partisan Association said he too believes offshore sales are a real problem, but he dismissed the mayor's initiative as cheap politics on the eve of a civic by-election to replace a councillor who resigned.
"This is 100-per-cent politically motivated, to raise the profile of Vision Vancouver one week before the by-election."
Mr. Affleck also said that, if the city wants more housing to go to locals, a better move is to encourage the building of row houses – a form of housing that local families desperately want but is of less interest to investors.
A University of B.C. business professor who specializes in real estate also panned the move, saying he could not see the benefits.
Tom Davidoff said some policies from Mr. Robertson and Vision Vancouver aimed at tackling housing issues are praiseworthy, like the empty-homes tax.
But he said the new one would likely accomplish little.
West Vancouver councillor Mary-Ann Booth was not happy, in the end, with the agreement her city worked out over presales. She said the developer priced the units so high that few locals were able to buy in, even when they had preferred access at the beginning of sales .