By Peter Mitham, Business in Vancouver
April 25, 2018
The real estate industry has taken umbrage and given flak regarding various measures Victoria has proposed to moderate the province’s housing market.
Taxes designed to curb speculation and other forms of demand and give local buyers an edge play well to the public, but the unintended consequences have drawn fire and forced tweaks.
Unveiled against a backdrop of new mortgage qualification rules that imposed a stress test on borrowers, it’s no surprise that housing sales declined 9.4% in the first quarter, according to the BC Real Estate Association (BCREA).
“You simply cannot pull as much as 20% of the purchasing power away from conventional mortgage borrowers and not create a downturn in consumer demand,” wrote BCREA chief economist Cameron Muir in his monthly market report.
But of course, we’re not given two eyes to look at things one way. Martello Property Services Inc. recently sponsored content in local media saying that Vancouver’s empty-home tax – applied to approximately 3% of residential properties in the city – meant greater choice for tenants and more stable rents.
“The tax has provided a little bit of breathing room for people in the market to find a place to live at more affordable prices,” Martello senior vice-president Warren Smithies said in the piece.
Ontario economist Will Dunning struck a similar note in his quarterly report for New Westminster’s Landcor Data Corp. in considering the impact of heightened taxes on foreign nationals and non-resident owners.
“[These] will reduce buying to some extent, although they might also mean that more properties will be offered for sale by non-resident owners, which would mean more opportunities for purchases by residents,” he opined.
Some observers feel those claims are premature, however.
David Goodman, a veteran apartment broker with HQ Commercial in Vancouver, said spring usually brings more choice to tenants, especially for secondary suites, because of turnover among students.
Muir noted the low rate of foreign ownership in Vancouver means any sales by foreign owners would have little impact on supply.
“Foreign buyers in Metro Vancouver last year were 3.6% of homebuyers, so how is a change in that number going to impact the market at all?”
Muir added that any impact would be tough to verify.
He feels the real drivers of the market continue to be ignored.
Supply is especially needed, both in terms of listings and new construction. Resale listings are at historic lows, meaning prices have continued to increase this year despite hopes for greater affordability.
Moreover, new supply contributes to economic activity whereas demand curbs don’t.
“The cure for a lack of supply in the housing market is typically more supply,” he said. “Severely cutting demand has a negative impact on the economy, whereas increasing supply has a very positive impact on the economy and jobs.”
Colliers International is undertaking an EcoChallenge this week at four of the commercial properties it manages in Canada, including Airport Square on West 73rd Avenue in Vancouver.
The two-week exercise challenges tenants to take steps to adopt more environment-friendly habits, whether that’s walking more and using vehicles less, cutting back on single-use items or shifting to reusable items.
Nicky Arthur, sustainability manager for Western Canada with Colliers’ real estate management services team, said the initiative follows the success of an in-house pilot Colliers employees undertook last November.
Developed by the Northwest Earth Institute of Portland, Oregon, the pilot program saw 200 employees undertake activities designed to respect the environment, enhance health and wellness and build community. Participants got more exercise and sleep, volunteered in the community and cut carbon emissions by 492 kilograms. Water conservation totalled 23,806 litres.
While not all tenants have signed on, Arthur said the program has meant changes in the lives of 80% of participants. She went vegan for two weeks, for instance, and while she’s resumed her regular diet, it includes a few new standards such as almond milk instead of the bovine alternative.