Saeid Fard is a digital designer and president of Sokanu, a Vancouver-based career discovery platform.
Dear Justin Trudeau,
Congratulations on your recent electoral victory. I am writing to you because I am concerned about the skyrocketing cost of housing in Vancouver. Local and provincial governments have been unwilling or unable to fix the problem and I am hoping someone in Ottawa will lend the people of Vancouver their ear.
The city's housing prices continue to diverge from local economic conditions. In my riding of Vancouver Quadra, for example, the median income is $33,872, while the average home price is nearly $1.5-million. The market is now effectively only accessible to two classes of people: those with (typically) undeclared foreign capital or income; or, those who had a foot in the market before this housing hysteria began and can use the proceeds from a sale to buy something smaller for themselves or their families.
Foreign capital is, in large part, the culprit. A 2014 study by Macdonald Realty and Remax showed that 70 per cent of clients buying properties greater than $3-million in Vancouver were from mainland China. A more in-depth investigation by The Globe and Mail that looked at 250 recent Vancouver transactions above $1-million indicated that a large minority of these homes sat empty, and that one in three transactions were registered to students or homemakers who declared little to no income and collected social services, all the while receiving undeclared allowances, sometimes worth hundreds of thousands of dollars, from relatives abroad. The investigation went on to show that, not only is a large class of millionaire homeowners neglecting to contribute to the income-tax base, but, through a series of loopholes, are also not paying capital gains or transfer taxes on the sale of their properties.
The city's housing market has become a bank account and vacation spot for the world's wealthy. Many neighbourhoods are being hollowed out by investors who have no meaningful economic ties to the country, while the city struggles with nearly 100-per-cent occupancy rates. Practically everyone in Vancouver knows this, but sensitivities around xenophobia make it difficult for people to engage in a rational conversation about solutions.
Meanwhile, unaffordable housing has become the status quo and its impact is cascading through the lifeblood of Vancouver. Young people are leaving in droves, and with them the city's future. Businesses struggle to recruit and retain talented people in spite of all that Vancouver has to offer. And, perhaps hardest to measure, by slowly evolving into a city that only caters to the proclivities of the world's wealthy, Vancouver is losing its diversity, vibrancy and egalitarian spirit, which were once its hallmarks.
Unfortunately, there are stakeholders who oppose sensible change. They invest in producing and spreading misleading statistics to claim that foreign ownership has no impact on local prices, all the while, ironically, fearing any policy that would restrict it. I understand that any measure to temper housing prices will hurt economic figures, such as GDP, in the short term. Foreigners buying homes leads to new housing construction and larger retirement nest eggs for incumbent homeowners, after all. But when a city's housing market becomes virtually inaccessible to the vast majority of locals who do not already own a home, something has gone seriously wrong.
Those priced out of the market are not asking for lower housing costs. They are asking for a rational housing market. One where the domestic economy, and not just foreign capital flows, determine home prices. It is a perversely twisted reality in Vancouver that the more the Canadian economy struggles, the more housing prices boom, partly as a result of a cheaper Canadian dollar.
Federal solutions to our housing predicament championed by all major parties in the recent election focused on making mortgages or capital more accessible to first-time buyers as opposed to dealing with the underlying sources of the problem. I fear this will only further fan the flames of unaffordable prices and punt a true housing crisis a few years into the future.
Here is a list of policy solutions:
- Tighten loopholes that allow residents to funnel money untaxed from abroad.
- Strengthen the Canada Revenue Agency’s capacity to audit foreign capital and increase penalties for non-compliance.
- Work with Quebec to eliminate or reform its immigrant investor program.
- Enact foreign-ownership restrictions.
- And finally, work with cities to improve public transportation and unlock more liveable neighbourhoods outside the city core.
A rational housing market would have incredible long-term benefits to Vancouver. The city is consistently ranked as one of the most liveable cities on the planet. It is home to the country's busiest port, a well of highly educated and tolerant people, and an abundance of resources. And yet, because a minority of people stand to gain from the housing hysteria, we have become a one-trick-pony town.
The question for leaders like yourself, Mr. Trudeau, is whether there is a willingness to put the city's long-term viability as a place for locals to live and do business ahead of interest groups that will slowly turn Vancouver into Canada's Monaco.