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

The website Chigoby is among eight scam online retailers that have been identified by the Better Business Bureau. The site was fraudulently using an Abbotsford residential address, but has since switched to one in Poland.
Eight scam online-shopping websites fraudulently use Abbotsford address

Better Business Bureau says victims lost hundreds for non-existent or poor-quality products

Last year, the Mission Christmas Bureau celebrated its office opening with an open house. Covid-19 has forced the organization to switch to online registrations this year. / Kevin Mills File Photo
Registration for this year’s Mission Christmas Bureau will be completed online

Bureau gearing up to make Christmas possible for hundreds of local families and children in need

Barry Shantz in 2015 in front of a homeless camp at Gladys Avenue and Cyril Street. Abbotsford News file photo.
RCMP officers cleared in killing of Abbotsford homeless advocate

Barry Shantz was shot following a mental health crisis at his home on on Jan. 13, 2020,

Police tape is shown in Toronto Tuesday, May 2, 2017. (Graeme Roy/The Canadian Press)
CRIME STOPPERS: ‘Most wanted’ for the week of Oct. 18

Crime Stoppers’ weekly list based on information provided by police investigators

Local photographer Wolf Drescher spotted film crews set up along Esplanade Avenue in front of Canwest Art Gallery on the Lake on Thursday, October 1. Film production crews working on ‘Solitary’ will be around the area until close to the end of the month. (Contributed Photo/Wolf Drescher)
“Solitary” Update: Dramatic action scene to be filmed in Agassiz

‘Solitary’ will film a break-in, getaway at Kent Outdoors

FILE – People wait in line at a COVID-19 testing facility in Burnaby, B.C., on Thursday, August 13, 2020. THE CANADIAN PRESS/Darryl Dyck
167 new COVID-19 cases, 1 death recorded as B.C. enters 2nd wave

Three new healthcare outbreaks also announced

Rio Tinto Alcan’s aluminum smelter at Kitimat competes against producers in the Middle East and Russia that have no carbon tax. (Rio Tinto)
B.C. carbon tax highest in Canada, export industries unprotected

B.C. NDP, B.C. Liberals say they’re looking at exemptions

In this file photo, snow is seen falling along the Coquihalla Highway. (Liam Harrap/Revelstoke Review)
Weather statement issued for Coquihalla, Hwy 3, as arctic front approaches

The early season snowfall expected to hit Fraser Valley, Friday, Oct. 23

(Pixabay)
Vancouver teacher suspended after swearing, touching students and complimenting underwear

McCabe touched students, including rubbing their backs and necks, touching their hair and hugging them

The Surrey Eagles are currently seeking billet families for its players in advance of the 2020-‘21 BC Hockey League season. (Garrett James photo)
BCHL team in ‘desperate’ need of billet families for upcoming hockey season

COVID-19 pandemic has made finding homes for players difficult: billet co-ordinator

John Horgan brought the NDP campaign to Langley on Wednesday, Oct. 21, just three days before the B.C. vote (Matthew Claxton/Langley Advance Times)
Horgan brings NDP campaign to Langley

Predicts gains, says people are looking at the party ‘differently’ after three years

A glimpse of some of the 480 (approx) cars written off as a result of the acid spills along the Trail highway in 2018. Photo: Trail Times
2 years after huge highway acid spill, Kootenay Ford dealer’s frustration grows with ICBC

Trail AM Ford owner Dan Ashman says he just wants fair compensation from ICBC

Mail-in ballot from Elections BC (Katya Slepian/Black Press Media)
At least 26% of eligible voters have already cast their ballot, Elections BC says

Voters can cast a ballot until 8 p.m PST on Election Day

Most Read