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Opinion Youth pay the price for British Columbia’s real estate crisis

Raymond Wong is a member of HALT – Housing Action for Local Taxpayers.

Resorts need young people. They are needed to tend bar and wait tables. They are needed to landscape and to provide strength for labour work. They are needed to fix computers, check in hotel guests and to guide visitors throughout the property. At times, they are allowed to sell real estate, but most often are not able to buy real estate themselves.

Sound familiar?

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British Columbia is at a crossroads. Are we a resort province? The path we've taken over the past 10 years would suggest that's the goal. From Parksville to Prince George to Penticton to Port Moody to Powell River, young people are faced with an uncertain housing situation primarily a result of the heavy influence of outside money in the Lower Mainland real estate market. Notice I didn't say foreign or overseas, I said outside. If you analyze the census data, it becomes incredibly clear that a large portion of the money being used to purchase real estate in Vancouver has not been earned in Vancouver.

We are told that outside buyers are a small but significant portion of the purchases in the market. But these statistics don't include properties where the beneficial ownership is transferred via a bare trust after being purchased by a numbered company. They don't include homes purchased by money laundered through casinos or banking channels and then transferred to local citizens. Quite simply, these statistics are inaccurate and incredibly misleading.

But now we have a new NDP minority government, supported by the BC Greens. Both ran on platforms that stated the goal was to make life more affordable for the average citizen, with a particular focus on fixing our out of control housing market. What we have received since the NDP took control in Victoria on July 18, 2017, has been inaction, and smoke and mirrors.

While the housing crisis gets worse every day, we hear Premier John Horgan speaking in front of real estate developers and taking a cue straight from his predecessor, Christy Clark, talking about protecting "earned equity." We hear the Housing Minister Selina Robinson answer a question about foreign-buyer numbers: "You know, I haven't thought about that." And we hear Finance Minister Carole James stand up in the legislature and talk about a "comprehensive housing strategy" coming in February.

Why the wait?

Every day, someone in British Columbia is faced with a rental increase that has the potential to force them into homelessness. Every day, a hard-working person with an above-average income is faced with a decision on how far they will have to commute to work every day if they want to purchase a property. And every day, a couple is forced to put their goal of having a family on hold, waiting for some kind of government action that will increase the affordability of the primary expense in everyone's life, their home.

When we hear Mr. Horgan talk like Ms. Clark about earned equity, we should all be asking how someone has "earned" a 75-per-cent appreciation in property value over three years. Most real estate economists would tell you that someone earns an average appreciation of 2 per cent to 3 per cent a year by paying their mortgage. The other 66 per cent to 69 per cent is purely a lottery win.

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Another question I like to ask naysayers is to provide me an example of a real estate market that has appreciated 75 per cent in three years with stagnant local wages and a reduction in population growth. Because if you look at the census, that has occurred in the Lower Mainland.

The trickle-down argument usually revolves around this equity being used to start businesses. We are supposed to believe that someone in their 50s or 60s sitting on enormous wealth is now going to use that money to start a business. But what about the young person who has a great business idea, youthful initiative and an appetite to succeed, but doesn't have housing stability or any disposable income? And are there any data at all to suggest that the aging population that primarily benefits from higher real estate prices is using that money to start businesses? No, there aren't.

If you want to encourage entrepreneurship, you put more money into the pockets of young people, plain and simple. Those approaching retirement are focused on that next stage of their lives.

The housing affordability crisis in B.C. is a massive drain on our economy, with no end in sight. Every day, it becomes more expensive to buy or rent, which means a millennial has less money to pursue entrepreneurship. The trickle-down argument has been made by Ms. Clark and the Liberal Party for years. Will Mr. Horgan fall prey to the same thing?

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