That the Vancouver housing market has been superheated for years is not a matter of debate – home-price data amply demonstrate the run-up. But beyond that obvious fact, there is far less clarity about the many complex factors behind the city's real estate boom, leaving governments to make policy with a highly incomplete understanding of the landscape said policy is supposed to remake. It's like doing a home reno while blindfolded.
Vancouver's proposal to create a vacancy tax for unoccupied homes illustrates the problem. The city is proposing to start taxing people who leave housing units empty for a year or more, hoping the added cost will spur absentee owners to rent or sell. If there really are a lot of empty homes, then the flood of inventory hitting the sale and rental markets would, in theory, cool both rental and purchase prices.
It turns out, however, that this well-intentioned idea is fraught with practical obstacles. Chief among them: the definition of "vacant." Some owners say their homes are vacant because they are away frequently, or because the houses are tied up in legal or probate disputes, or because – as appears to be the case in the majority of vacancies that have been the subject of public complaints to the city – the owners are awaiting a decision from city staff on applications for permits to do work on the property. So how many homes in Vancouver are "vacant"? Good question. What proportion of those "vacant" homes are owned by absentee speculators holding them as investments? Also unknown.
The city is now saying it will rely on owners to self-report when they are leaving a property empty for an extended period of time, essentially requiring people to volunteer to pay the new tax. It's a solution that seems destined to fail, although staff say they will also do audits in high-vacancy neighbourhoods and will act on phone tips from neighbours – which sounds like the perfect marriage of intrusiveness and ineffectiveness.
This is not the first stab at real estate policymaking in a fact-light environment. When the provincial government implemented a 15-per-cent foreign buyers tax in August, it was also done without comprehensive data on the extent of foreign buying in the market.
Policymakers cannot always wait for perfect information before they act. But when it comes to Canadian housing, that lack of information is not a given. It's a choice. Knowledge is power – and that's why, faced with several mysteriously hot real estate markets, Canadian governments have repeatedly looked powerless.