A landmark ruling, conversations around affordability, and a “third housing sector” in Vancouver?
With March gone, so too goes the first quarter of the year. And still, many industry experts are doubting and questioning the state of housing affordability – but could it just be some sort of quarter-year crisis?
According to RBC’s Housing Trends and Affordability report released on March 30, overall housing affordability actually improved, for the first time in nearly three years – a little. This was however not the case for the Vancouver condo market, which saw the affordability measure increase by 4.8% year-over year, meaning owning a home will now cost the average Vancouverite 46.1% of their household income.
In addition to housing affordability, Vancouver’s general living affordability has been highlighted by a report conducted by the Economist Intelligence Unit, which isn’t based on home costs at all. Instead, it looks at food, drink, clothing, rent, transport, etc, and ranked Vancouver as the 39th most expensive city in the world, tied with Barcelona, Brussels, and Nouméa (don’t worry, we had to look it up too). Vancouver is the most expensive Canadian City, with Montreal (62) and Toronto (86) both placing in the top 100.
Back on the housing market, a couple ideas that have surfaced on how to mend it.
First, The City of Vancouver hopes to address its issues of housing affordability by building more housing to meet specific demands like close proximity to transit stations, streamlining the proposal process for developers and by giving away its own land with an aim to build targeted housing for low income earners and families. The new directives are promising, but as Mayor Gregor Robertson said, “affordability really hinges on the B.C. and federal government contributing.”
Second, some insiders like architect Michael Geller have called for a “third housing sector,” a sector created with partnerships between the public sector, private developers, non-profits and other community stakeholders.
Whatever the solution, it needs to be found, judging by this quote from former city planner Larry Beasley about not taking action on the city’s housing market.
“This is a big issue now… But even for your children it is going to be a phenomenal issue and they will face stark choices that not even you have faced.”
Heavy also is a good way to describe the potential impact of a B.C. Supreme Court ruling that targets a specific weakness in Canadian laws – a weakness that often leads foreign owners to markets like Vancouver and Toronto. The ruling ordered notary public Tony Liu to pay back $600,000 for failing to disclose that the sale of a $5.5 million house was to a foreign owner, which means the CRA did not receive the 25 per cent capital gains tax it charges non-resident sellers of Canadian property on any profit they make on the sale.
“This truly is a game changer… It’s a precedent. Real estate agents can now get a knock on the door from the taxman, asking for the (capital gains) taxes that should have been collected by Ottawa, because the agent failed to make adequate inquiries.” – Vancouver Immigration Lawyer, Richard Kurland
That was March, in short. On to Q2. Only 9 months until fiscal 2018.