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

Pitt Meadows to host live virtual city council meeting Tuesday at 7 p.m.

Mayor Dingwall updates on new initiatives and city staffing

Haney Bypass section closed for Easter long weekend

Bypass improvements expected to be completed later this year

City of Pitt Meadows Launches Local Business and Services Listing

Guide provides info which will encourage and enable residents to shop local

IN IT TOGETHER: Take good care of yourself, so you can care for others

Maple Ridge woman offers series of wellness columns aimed at helping navigate through COVID-19

Historical artifact found in Maple Ridge returned to Katzie First Nation

Katzie chief Grace George is grateful to have stone maul returned

COVID-19: 4 new deaths, 25 new cases but only in Vancouver Coastal, Fraser Health

A total of 1,291 people have tested positive for the novel coronavirus

COVID-19: Don’t get away for Easter weekend, Dr. Bonnie Henry warns

John Horgan, Adrian Dix call 130 faith leaders as holidays approach

COVID-19: Trudeau says 30K ventilators on the way; 3.6M Canadians claim benefits

Canada has seen more than 17,000 cases and at least 345 deaths due to COVID-19

RCMP call on kids to name latest foal recruits

The baby horses names are to start with the letter ‘S’

As Canadians return home amid pandemic, border crossings dip to just 5% of usual traffic

Non-commercial land crossing dipped by 95%, air travel dropped by 96 per cent, according to the CBSA

Logan Boulet Effect: Green Shirt Day calls on Canadians to become organ donors

While social distancing, the day also honours the 16 lives lost in the 2018 Humboldt Broncos Crash

COMMENTARY: Knowing where COVID-19 cases are does not protect you

Dr. Bonnie Henry explains why B.C. withholds community names

B.C. wide burning restrictions come into effect April 16

‘Larger open burns pose an unnecessary risk and could detract from wildfire detection’

Most Read