Trouble at Home: Vancouver’s Housing Evolution

It’s been a year since I last posted about a solution and a few weeks since the British Columbia government finally decided to crack down the never-plummeting stock that is the Vancouver Housing Market — and despite all that, we’re still nowhere near a formidable solution. And even as the housing market continues to grow and house prices continue to escalate, it really begs the question: is there anything we can do about it?

Vancouver is a unique city. Nestled between the mountains, shielded from the ocean, and home to one of Canada’s more warmer cities. With a growing technology sector and even more economic growth, it’s no wonder that this city has drawn the attention of students, immigrants, and entrepreneurs worldwide. While the city cannot consider itself to be in the category of “megacity”, it surely feels like they are inching ever closer to it. And with an imminent promise, Vancouver should be ready to deal with what’s ahead.

With a lot of megacities, their evolution happened so quickly that they could barely recognize its occurrence — they could only acknowledge its predicament after the fact. Often times, in rising populations, cities tend to lose control of crime, traffic, and, most crucially, housing.

Through the great work of the Vancouver Police Department and the cumulative works of other police departments across the lower mainland, crime in the region has decreased and it has never truly bloomed into being a considerable crisis. That said, Vancouver hosts some of the worst traffic in North America and evidently is in the midst of a housing boom that unfairly disadvantages people from the region.

The city is growing. The market is increasing. And Vancouver needs to prevent this backwards spiral so that their evolution to megacity status is rendered well-prepared and intelligently thought-out.

Take Singapore for example. Wholly-situated on a lonely island, the entire nation of 5.5 million sits cozy in what is the third most densely populated city/nation in the entire world. Having only been a city itself for almost 51 years, Singapore has seen its population triple, its economy become one of the competitive in the world, and its status shift from third-world to first world affluence. That said, what’s most intriguing is that this could only have happened once the government dealt with their own housing crisis in the 1960s.

One of the late Lee Kuan Yew’s more consequential legacies was his government’s establishment of the Housing and Development Board. Immediately from their inception, the HDB installed their 5 year plan which saw 51,000+ housing units built which would house 400,000 (1/4 of the population at the time). To permit this, the government forced and capped land purchases, thereby preventing land profiteering. Furthering from that, the government also introduced a method for residents to tap into their national pensions to purchase a home, and they also introduced an ethnic integration policy that prevented racial segregation and promoted the idea of multicultural harmony. Now, 50+ years later, the result of the HDB’s rigorous housing strategies has resulted in a city with 90% home ownership and a total eradication of homelessness.

But that itself is just a part of it. Singapore’s success can equally be attributed to their intense investment in public transport, public discipline, and social services like ensuring affordable housing is accessible and acceptable. Sure, the country still hosts a number of environmental and social issues, but from its founding stage, the nation understood the value of controlling housing and protecting its citizens.

These state policies have very important for social stability and building the sense of nationhood. I think that Singapore’s long-term approach to planning and public housing has been two very important pillars for us to develop to where we are today.” — Dr. Cheong, CEO of Singapore’s Housing and Development Board

So it begs the question: what can Vancouver do? Currently, there is no cap on house prices, traffic is worsening, foreign home ownership is escalating, homelessness is not declining, and we are seeing an urban sprawl that could reach as dangerous a level as Los Angeles.

Establish a Housing Cap

This may be an unpopular decision, but it may be the only way to limit the escalation of Vancouver’s housing prices. Currently, the real estate market is truly functioning off of an auction-like basis where location has become the deciding factor. In this day, buying a house in Vancouver may just be the highest yielding stock purchase in Canada.

There needs to be control. There needs to be regulation. By setting regional limits on housing prices, homeowners can still profit off of selling their home. With such a regional factor, homeowners can vary their price based on their home’s merits (ie number of beds/baths, area, etc).

Now, you may think that purposely lowering prices will allow richer buyers to have an easier bet, but it may just be the opposite. By lowering prices, more buyer merits can be focused on to determine the eventual new owner; comparative examples include credit scores, banking history, and local contributions. This doing will not only control the escalation of housing prices, but it will allow local residents to become more competitive in real estate.

Turn bad traffic into better transit

This may be a little off tangent from the topic at hand, but the key to controlling the market is to ensure people have better access to all parts of the city. Currently, the greater Vancouver region is experiencing a rapidly increased pace of urban sprawl. More and more newcomers are moving beyond Abbotsford, Maple Ridge, and West Vancouver. And with this spread of population comes worsening traffic times. Considering that the entire GVRD only has one major highway, it is essentially important that the city strongly increases their investment in public transit.

With better transit options extending to even more regions, housing prices won’t be as disadvantaged due to their lack of public transit or prolonged traffic time, and the influence of location on the real estate market can be reduced. By allowing all residents of the region to have better access, we only permit a more connected Vancouver.

Introduce legislation favouring local ownership

Just recently, BC Premier Christy Clark introduced a 15% tax on foreign buyers. This was done after mass criticism from the middle class calling on regulations on foreign buyers who played a significant role in escalating Vancouver’s housing market in the first place. Another tax which was widely called upon was a tax on vacant homes, but the government has yet to pass legislation concerning its future.

But with Clark’s new tax, it really begs the question: is it effective enough? Now, it may be too soon to tell, but one major issue I see with the tax is who it is targeting. The tax specifically targets permanent residents, non-citizens, and anyone who can be considered as foreign. The major issue with this is that a lot of Canada’s greatest contributors are not yet Canadian. I, myself, lived in Canada four years before becoming a citizen. The primary consequence of this tax is that it targets nationality and not income.

Perhaps, a more effective way to tax a foreign buyer would be to judge if their source of income and/or established wealth is uniquely Canadian or not. What needs to be done is impose this same tax on buyers who do not have employment in Canada; thus, it will no longer disadvantage students, permanent residents, and foreign workers.

Now, you may propose that this will permit the obvious loophole of money laundering. And for that, the government needs to be prepared. Whatever legislation that gets birthed must favour local residents who contribute to the regional economy, so much so that the only loophole available would be for a foreign buyer to live, work, and invest in Vancouver.

BUILD AFFORDABLE HOUSING

One positive ramification of Clark’s foreign buyer’s tax is that all revenue will transfer to a special housing fund. That itself must be the attitude of Vancouver’s progression.

The city needs more affordable housing to allow more people to be on the path of home ownership. In essence, the city needs to build up — more and more condominiums will be the only way Vancouver can effectively prepare itself for a megacity status.

All in all, Vancouver continues to grow: in economy, in industry, and in population. More and more people will call this region home in the coming years, and it is remarkably important that the city is prepared. Foreign investment in Vancouver must always be encouraged as it has faithfully acted as a manner of positive betterment. That said, we must take a backseat to our local residents. Housing needs to be affordable and excessive. And the people who should receive the most advantage are those fully immersed in the community that is Vancouver.