Townhomes offer a modest way of increasing density that could provide much more housing

Townhomes offer a modest way of increasing density that could provide much more housing

‘Backwards’ tax system, zoning undermines affordable housing

U.S. cities better at giving locals advantage over foreign buyers, UBCM delegates told

B.C.’s crisis of high real estate prices is largely self-inflicted, according to a leading housing expert who on Tuesday urged cities and the province to embark on major reforms to deter rich foreign buyers and support local workers.

“We’re the victims of overseas capital markets, but we’re inviting it,” UBC business professor Tom Davidoff told delegates at the Union of B.C. Municipalities convention in Victoria. “We have a big ‘Kick Me’ sign on our back.”

Davidoff argued city councils are too easily swayed by homeowners, particularly in affluent neighbourhoods, who oppose what he calls reasonable density in the form of townhouses that would provide much more housing supply.

The result is too much land locked up in single family zoning and those houses steadily being redeveloped into luxury mansions that are far beyond what’s affordable to a typical working residents.

He said current zoning that overwhelmingly allows only detached houses on most land in the Lower Mainland effectively means “you are banning by law 95 per cent of the Canadian population from most of the good land around Vancouver.”

Tax policy is also a big factor, and Davidoff contrasted B.C.’s “backwards” approach with U.S. jurisdictions.

U.S. cities with high real estate prices charge much higher property taxes than Metro Vancouver cities, he said.

Meanwhile Americans can deduct their mortgage interest and property taxes from their income and reduce their income tax.

The effect, Davidoff said, is those Americans are further ahead every year by roughly 1.5 per cent of their property value compared to a foreign investor who has no deductions against U.S. income.

“We don’t do that. We don’t provide the local workforce with a tax advantage relative to people who don’t make income here,” Davidoff said. “The tax system invites international demand because we barely tax property and we whack income.

“You are hurting land owners economically, you’re killing the work force and you’re rewarding rich people who bring in bags of money from outside.”

Helmut Pastrick, chief economist of Central 1 Credit Union and another housing market panelist at UBCM, said he expects a “mild price correction” as the housing market continues to reverberate from the 15 per cent foreign buyers tax now in effect in Metro Vancouver.

But he predicts the new tax will prove to be a “distraction” as a long-term uptrend in prices resumes.

“I predict that over the next 25 years, housing prices will more than double,” Pastrick told delegates, to gasps. “Over the long term, housing affordability will worsen.”

The accelerating trend in the years ahead will be higher density, smaller units and more people renting than owning as prices rise further, he said.

The federal government is worried about the hot Vancouver and Toronto markets and could try to cool them through further restrictions, such as higher down payment requirements on insured mortgages, he said.

But prices will continue to be driven by a lack of supply, and factors such as the limited land base in the Lower Mainland, and the projected 1.25 million additional people forecast to come to B.C. by 2041.

“The fundamentals are not going to change,” Pastrick said. “You can have this 15 per cent buyer tax and I predict prices will continue to rise after we get through this market disruption. Maybe it needs to be 100 per cent.”

Victoria city councillor Chris Coleman said cities must work to make housing more affordable or else “we will see the rise of tent cities across all our regions.”

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Victoria police arrested three men following a double stabbing April 19. The two victims suffered non-life-threatening injuries. (Black Press Media file photo)
Three arrested after double stabbing in Victoria

Two people sent to hospital after being stabbed, hit with bear spray

Club Phoenix Fitness in Langford is the first Island business to be ordered closed by the provincial workplace closure order put into effect April 11. It will be closed until at least April 29. (Google Streetview/Screenshot)
Langford gym first Island business to be closed by public health order

Workplace closure order can now close businesses with three or more COVID-19 cases

Father Marinaldo Batista, who served at Catholic parishes in Saanich and Sooke, died April 1 in Brazil from complications of COVID-19. (Facebook/St. Elizabeth Church)
Brazilian priest who served in Saanich and Sooke dies from COVID-19

Father Marinaldo Batista, 53, went to Brazil to visit his parents and died there April 1

A sewage pipe is pulled along Niagara Street in James Bay in 2018 as part of the Capital Regional District’s wastewater treatment plant project. Over the next 10 years, the city will complete 78 new underground infrastructure projects, upgrading sewage, stormwater and water main pipes. (Black Press Media file photo)
Construction begins on Victoria’s 10-year pipe replacement project

78 underground infrastructure projects will cost $53.8 million

FILE – NDP Leader John Horgan, right, and local candidate Mike Farnworth greet one another with an elbow bump during a campaign stop in Coquitlam, B.C., on Friday, September 25, 2020. THE CANADIAN PRESS/Darryl Dyck
B.C. won’t be using random individual road stops to enforce travel rules: Safety Minister

Minister Mike Farnworth says travel checks only being considered at major highway junctions, ferry ports

Police executed a search warrant at the Devils Army Clubhouse on Petersen road in Campbell River on August 10, 2017.
Murder trial into 2016 Campbell River killing underway in Victoria

Ricky Alexander is charged with the first-degree murder of John Dillon Brown

..
Abbotsford nurse at ‘breaking point’ pleads with public to take COVID-19 seriously

Instagram post urges general population to stay home, wear a mask and get vaccinated

Alex Mah of Chemainus spends a sunny day at Kin Beach reading to daughter Beatrice Mah. 3. (Photo by Don Bodger)
Vancouver Island’s mini-summer poised to fade

Cooler and damper this weekend, summer-like conditions not likely to return until late June

Nanaimo Fire Rescue investigator Mark Jonah probes the scene of a blaze that destroyed two apartments on Sunday, April 18. The cause of the blaze has not been determined. (Chris Bush/News Bulletin)
Arson suspect arrested after apartment fire in Nanaimo

35-year-old man arrested for allegedly starting fire lived in the complex

A wildfire has started near Gold River, and B.C. Wildfire Service crews are on scene. Photo courtesy Coastal Fire Centre
Small wildfire burning in difficult terrain near Gold River

Coastal Fire Centre investigating, but confirms blaze is human-caused

FILE – Health-care workers wave to people clapping and yelling thank you to the frontline workers during the 7 p.m.-tribute outside the Lions Gate Hospital in North Vancouver, B.C. Wednesday, April 8, 2020. THE CANADIAN PRESS/Jonathan Hayward
B.C. nurses issue plea for all to follow health orders as hospitalizations spike

Nurses worried about strain COVID-19 is having on hospital capacity, care

Most Read