Housing affordability is a major problem on the Lower Mainland, and some blame foreign investors for driving prices sky high (here we’re talking about owners who buy up properties from afar, often with cash, for investment purposes, which is very different from newcomers to Canada who often take out a mortgage, live in their properties and get involved in their communities or those who rent out an investment property). The trouble is, CMHC hasn’t really been able to quantify the number of foreign investors who have purchased homes in Canada, a data gap that frustrates many people in the real estate industry. Without solid data, it’s hard to know if this is perception problem or an actual problem.
UBC planner Andrew Yan’s research raises questions about whether the city is turning into a high-end resort or a haven for offshore investment. [image from Globe and Mail]
Some investors can afford to let their properties sit vacant as they wait for the property to appreciate in value, while many local Vancouverites must take out mortgages and move further outside of the city to afford home ownership. Some investors see it as a smart place to park their cash given recent volatility in international markets. Beyond driving up prices, empty homes are problematic for a couple of other reasons too. Absentee owners aren’t around to support local businesses, to rake the leaves or get involved in local charities. If the lawn isn’t mowed or the mail piles up, it can annoy neighbours, but it doesn’t really impact the owner.
This is also a problem in New York City, where Mayor Bill de Blasio is considering a tax on its own non-resident owners of high-end properties. The levy would apply to anyone who spends less than half the year in the city and owns a property appraised at more than $5 million US. Not surprisingly, real estate lobbyists and developers are resisting the new tax, but it will require approval from two houses of the state legislature and the governor before it becomes a law.
Here in B.C., annual property taxes are standard, but many Vancouverites support an additional vacancy tax on non-resident owners. Earlier this month, Insights West asked Vancouverites about a recent debate over taxing people who acquire properties in Vancouver but do not live in them. Seventy-two per cent of respondents called it a “very good” or “good” proposal, while 18 per cent considered it a “bad” or “very bad” idea, according to an article in the Vancouver Sun. How this vacancy tax would be implemented and whether it would actually improve affordability still remains to be seen.