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

Helping others, especially those struggling with mental health issues, keeps MOD Pizza owner Jim Hayden cooking. (RIck Stiebel/News Staff)
A 1900s writing box found in Greater Victoria contained ink, photos and a letter addressed to Clara McCaubry dated October 14, 1898. (Photo courtesy Suzanne Hervieux)
Mysterious 1900s writing box finds a home among Saanich Archives

Wooden chest owned by early Saanich resident Clara Isabelle McCaubry

(Black Press Media file photo)
Spooky online class cooks up funds for Greater Victoria Imagination Library

United Way Greater Victoria offers how-to for witch cookies, tasty coffin as fundraiser

Murray Rankin has announced he will seek the nomination for the Oak Bay Gordon Head riding in the 2021 provincial election (which could happen in the fall of 2020). The former Minister of Parliament for the Victoria riding from 2012 to 2019.
(MurrayRankin.com)
New Oak Bay-Gordon Head MLA Murray Rankin says he will use his federal connections

Rankin said being part of NDP majority government gives him a strong voice

NDP Leader John Horgan celebrates his election win in the British Columbia provincial election in downtown Vancouver, B.C., Saturday, Oct. 24, 2020. THE CANADIAN PRESS/Jonathan Hayward
Horgan celebrates projected majority NDP government, but no deadline for $1,000 deposit

Premier-elect says majority government will allow him to tackle issues across all of B.C.

FILE – Prime Minister Justin Trudeau greets Premier John Horgan during a press conference at the BC Transit corporate office following an announcement about new investments to improve transit for citizens in the province while in Victoria on Thursday, July 18, 2019. THE CANADIAN PRESS/Chad Hipolito
Trudeau congratulates Horgan on NDP’s election victory in British Columbia

Final count won’t be available for three weeks due to the record number of 525,000 ballots cast by mail

Comedic actor Seth Rogen, right, and business partner Evan Goldberg pose in this undated handout photo. When actor Seth Rogen was growing up and smoking cannabis in Vancouver, he recalls there was a constant cloud of shame around the substance that still lingers. Rogen is determined to change that. (Maarten de Boer ohoto)
Seth Rogen talks about fighting cannabis stigma, why pot should be as accepted as beer

‘I smoke weed all day and every day and have for 20 years’

NDP Leader John Horgan elbow bumps NDP candidate Coquitlam-Burke Mountain candidate Fin Donnelly following a seniors round table in Coquitlam, B.C., Tuesday, October 20, 2020. THE CANADIAN PRESS/Jonathan Hayward
Horgan, NDP head for majority in B.C. election results

Record number of mail-in ballots may shift results

The Canadian border is pictured at the Peace Arch Canada/USA border crossing in Surrey, B.C. Friday, March 20, 2020. More than 4.6 million people have arrived in Canada since the border closed last March and fewer than one-quarter of them were ordered to quarantine while the rest were deemed “essential” and exempted from quarantining. THE CANADIAN PRESS/Jonathan Hayward
Majority of international travellers since March deemed ‘essential’, avoid quarantine

As of Oct. 20, 3.5 million travellers had been deemed essential, and another 1.1 million were considered non-essential

Canada’s Chief Public Health Officer Theresa Tam responds to a question during a news conference Friday October 23, 2020 in Ottawa. Canada’s top physician says she fears the number of COVID-19 hospitalizations and deaths may increase in the coming weeks as the second wave continues to drive the death toll toward 10,000. THE CANADIAN PRESS/Adrian Wyld
Canada’s top doctor warns severe illness likely to rise, trailing spike in COVID-19 cases

Average daily deaths from virus reached 23 over the past seven days, up from six deaths six weeks ago

100 Mile Conservation officer Joel Kline gingerly holds an injured but very much alive bald eagle after extracting him from a motorist’s minivan. (Photo submitted)
B.C. driver thought he retrieved a dead bald eagle – until it came to life in his backseat

The driver believed the bird to be dead and not unconscious as it turned out to be

White Rock RCMP Staff Sgt. Kale Pauls has released a report on mental health and policing in the city. (File photos)
White Rock’s top cop wants to bill local health authority for lengthy mental-health calls

‘Suggestion’ included in nine-page review calling for ‘robust’ support for healthcare-led response

A Le Chateau retail store is shown in Montreal on Wednesday July 13, 2016. Le Chateau Inc. says it is seeking court protection from creditors under the Companies’ Creditors Arrangement Act to allow it to liquidate its assets and wind down its operations.THE CANADIAN PRESS/Ryan Remiorz
Clothing retailer Le Chateau plans to close its doors, files for CCAA protection

Le Chateau said it intends to remain fully operational as it liquidates its 123 stores

Most Read