Recent Study Condemns Federal, Provincial and Municipal Politicians for Gross Negligence in Unaffordable Housing Crisis
A recent report titled “Low Incomes and High House Prices” by veteran real estate group Site Economics asks two crucial questions to grossly negligent municipal, provincial and federal politicians in Metro Vancouver : (1) Why were newly-arrived who have reported extremely low incomes for many years, ever allowed to enter Canada and buy detached houses in Metro Vancouver, fuel massive increases in housing prices, evade appropriate income taxes and remain here? (2) Why has government response to obvious parasites not been swift and all-encompassing?
To most Canadians, it is particularly outrageous that these new buyers have “reported” median family incomes not only well below the urban average but also well below some poor and remote rural areas of BC.
Many of these recently-arrived buyers who have entered as Business Immigrants immigrants now live predominantly in Metro Vancouver’s traditionally “upper and upper middle class” western urban centres (City of Vancouver and municipalities such as West Vancouver, Richmond and Burnaby). Their houses have values that range between $1.5 million and $5 million. These prices are far above the regional average. Middle Class Canadian families have suffered unaffordability because of these new buyers. Lower income families in all of Metro’s lower-priced municipalities have also suffered. A similar outcome is now happening in Southern Ontario.
Here is a crucial fact : Metro Vancouver consists of 21 municipalities. Previous Vancouver Mayors Art Phillips and Mike Harcourt identified immigration as the cause of escalating house prices. Their conclusions have been recently rein-forced in great detail by UBC’s David Ley in his book “Millionaire Migrants”. Yet not one current mayor, one councillor, one MLA or one MP has had the backbone to state that the cause of the unaffordable housing problem is high and unnecessary immigration.
Site Economics does not pin-point the ethnicity of the newly-arrived, but everyone in Metro Vancouver knows that the majority of the relatively recent buyers in many Metro Vancouver municipalities are from Hong Kong, Taiwan and Mainland China, particularly China. Site Economics states that these new buyers are not contributing their share of the tax money that is required to maintain necessary infrastructure. Yet 400,000 of these occupants and their dependants now live in Metro Vancouver and have been using this infrastructure (elementary schools, high schools, colleges, universities, roads, hospitals, etc.), most of which was built before 1990. Most residents know that the people who built the infrastructure and who now pay for most of its maintenance are non-Chinese (Whites and other average income groups including long-time Chinese). In other words, these groups are subsidizing non-paying, newly-arrived Chinese.
Site Economics uses an internationally-accepted method of determining whether house prices are affordable. That method is called The Housing Affordability Ratio.The method determines affordability by comparing household income to house prices. For example, when detached house prices are up to three times the total of household income, the houses are still “affordable”. However, when house prices become 3.1 to 4 times greater than household income, the houses are “moderately unaffordable”. And when house prices reach 4.1 to 5 times household income, the detached houses are “seriously “unaffordable”. When house prices are 5.1 and more times greater than household income, house prices are considered “severely unaffordable”.
The outrageous point is that in all 21 of Metro Vancouver’s municipalities, not just in one or two, the median detached house prices are “severely unaffordable” !!! These prices range from 8 times to 37 times household income !!! We will repeat that point. House prices in every municipality in Metro Vancouver are now 8 to 37 times household income. It is unbelievable that politicians have allowed this treachery to happen to their own people. It is equally unbelievable that quisling politicians have supported such parasites!!
SITE ECONOMICS says this about politicians : “The fault lies not with the public or business, but with the politicians who should bring appropriate tax policies to bear and ensure that everyone pays their fair share. Politicians must be committed to the public realm; hence action must keep pace with the speed of growth. Negligence in doing so results in significant decline and damage to quality of life and the middle class.”
It makes the following important “social conscience” declarations about housing :
(1) “Residential real estate, like food and water, is a necessity. Individual homes were never intended to be an investment vehicle to be hoarded, or to be subject to artificial, non-market-driven shortages. This basic concept is reflected in Federal tax law, which exempts a primary residence from capital gains taxes, and…(limits) this exemption to a single tax exempt property per family.”
(2) “With its new emphasis on banking, the global economy has helped fuel the excessive appreciation of house prices worldwide, thereby encouraging speculation. Canadian tax laws are clearly outdated and unprepared for specialized requirements. They need periodic amendment in order to better reflect ever changing conditions and ensure they are fair and balanced.”
(3) “Uncontrolled residential prices hinder industrial and office development by competing for land and not paying sufficient property taxes. This harms business, thereby retarding job generation in an already handicapped economy, something no society should permit. This is in addition to high prices creating a problem with work force housing.The government should revisit and revise tax regulations to ensure everyone pays their fair share.”
(4) “In order to maintain quality of life, government needs to enforce and update income tax laws. Such action would help with housing unaffordability in Metro Vancouver as real estate prices would not be subsidized by under-priced public services.”
(5) “Currently all tax payers subsidize those who inappropriately report low incomes. By allowing some to not contribute sufficiently, government simultaneously harms and overburdens tax payers and inflates house prices.”
(6) “Real estate speculators who buy and hold properties can often capture, but not pay for, the value that the general public creates and pays for in taxes and infrastructure investment. The justification for an increased tax burden on speculators is obvious. Price and value increases are often due to public sector investments and are therefore “windfall profits” over and above normal economic profits and, as such, should be fully taxed. The public should not continue to subsidize the financial return of the speculator, particularly at these high prices. Real estate speculators value housing inappropriately harming those buyers who intend to live in their home. Speculators also increase community costs and undermine community services and local economies by increasing vacancy. The City of Vancouver reportedly has over 20,000 vacant homes, likely due largely to speculation.”
(7) “Real estate ownership is an essential pillar of middle-class family wealth as it facilitates capital being passed down through the generations. Government which delivers quality infrastructure also offers a high quality of life and strong legal protections. The uncounted billions of dollars being generated by real estate should be subject to updated taxation and fees and some of these funds reallocated to expand and enhance all forms of civic and natural infrastructure.”
(8) “The weakening of the middle class, income inequality, and decline of public infrastructure are all interlinked and reflect an increasing failure to govern based on ethical and fair guiding principles to promote the public good. Excessive investment in passive, unproductive or overpriced real estate can often be a sign of illegal or immoral financial activity such as money laundering. The primary ingredient of a real estate market is capital and why would so much of it want to be stored in unproductive houses and not a stock market.”
(9) ‘Irrationally high-priced real estate is not harmless or “green”. There are plenty of victims, from the environment to the middle class. Simply stated, Metro Vancouver is worth more than it charges in property taxes and fees.”
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For details, see the following :
http://www.metrovancouver.org/about/Pages/default.aspx
http://siteeconomics.com/wp-content/uploads/2017/04/High-House-Prices-and-Low-Incomes-April-2017.pdf
