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September 30, 2022

B.C. housing plan great 'in theory' but questions linger: Experts

The following article was written by Michelle Zadikian, senior reporter at Yahoo Finance Canada. Follow her on Twitter @m_zadikian.

Real estate watchers have both praise and unanswered questions about British Columbia NDP leadership hopeful David Eby’s sweeping proposal to bring more affordable housing to the province.

“There are a lot of big ideas and not a lot of detail. So it’s hard to get into the minutiae with some of this,” Rhiannon Foster, the owner of the Opportunity Homes Collective under Century 21 In Town Realty in Vancouver, told Yahoo Finance Canada in a phone interview.

“In theory, everything’s great – we just need to have conversations about what this actually looks like, and how it actually affects things and maybe, you know, draw small boundaries around some of these big ideas.”

Eby’s housing platform includes a $500 million fund to provide grants to non-profit organizations, co-ops and First Nations to buy affordable rental buildings that come up for sale and a B.C. Builds initiative aimed at fast-tracking approvals and construction of multi-family housing developments.

“The opportunity here is for the provincial government to bring together all of the partners, whether it’s non-profit organizations, whether it’s homebuilders, cities, other levels of government, to use public land to build actually attainable housing for the middle class in our province,” Eby said of the B.C. Builds strategy during a press conference in North Vancouver where he revealed the proposal this week.

The leadership candidate, who previously served as the province’s attorney general and housing minister, is also proposing a tax on property flippers, or those who sell a home within two years of purchase, with exemptions for those going through a major life event such as a divorce or job loss. He didn’t specify how much the tax would be.

Concerns about implementation

Foster says she has some questions about how the government would make sure the policies are going to be implemented properly or finessed to be the most effective.

Some of Eby’s proposals, such as the promise to legalize secondary suites across the board, were too broad, Foster says.

“There are certain places that maybe shouldn’t be zoned that way. Where the parking doesn’t allow for it, where the size of the lot doesn’t necessarily allow for it as well. So I think there’s, you know, a lot more nuance to something like that, that really needs to be examined,” she said.

While the Vancouver housing market, like virtually all markets across the country, has seen sales and prices drop as interest rates rise, the benchmark price of a home in Greater Vancouver was $1,180,500 in August, according to the Real Estate Board of Greater Vancouver.

In a new housing affordability report released on Thursday, RBC Economics says home ownership costs in Vancouver required 90 per cent of the median household income in the second quarter.

Paul Kershaw, an associate professor at University of British Columbia and founder of advocacy group Generation Squeeze, says the pledges to bolster housing supply and discourage property flipping are “great”, but they’re not novel ideas. He adds that more details, including a timeline for implementing the measures, are needed to truly gauge whether these promises will be impactful.

Both the provincial and municipal governments have tried intervening in the housing market to improve affordability in prior years, including by introducing a speculation and vacancy tax, and a foreign buyers tax. There’s little evidence to indicate such measures have been effective in keeping affordability in check.

Weighing both sides of the equation

Kershaw also encouraged Eby to consider how these proposals will impact home sellers, not just buyers and renters.

“It misses that the most common beneficiaries have been many everyday homeowners in B.C., myself included, because we have gained lots of wealth – and I’m not a big corporation or an investor,” he said via email.

“By ignoring how many everyday B.C. households benefit from skyrocketing home prices (aka housing inflation), Mr. Eby risks ignoring some key public policies that set the “rules of the housing game” – rules that sustain many British Columbians’ tolerance for high and rising home prices that leave earnings behind because they make many homeowners wealthier.”

Kim Taylor, a realtor with Angell Hasman & Associates Realty, agrees that sellers need to be taken into account.

“Since the affordability issue is always at the forefront, our government has a habit of favouring buyers and renters as the underdog while there is little thought for the seller who is selling their biggest asset, often to fund their retirement. I think it’s important to consider both sides of the equation,” she said in an email.

While some homeowners might oppose higher density housing in their neighbourhoods because of the potential negative impact on property values, Taylor likes Eby’s proposals to legalize secondary suites and allow builders to replace single-family homes with duplexes or triplexes.

“If implemented, these initiatives should create more affordable housing options for people. In terms of how it will affect investment in our real estate market, it might have a short-term “wait and see” effect, but like every government initiative to curb unaffordability in our real estate market, it won’t change that we live in one of the most beautiful places in the world and this will always be a desirable place to live and invest,” she said.

Zadikian, Michelle. “B.C. housing plan great ‘in theory’ but questions linger: Experts.” Yahoo! Finance. September 30, 2022. Accessed, September 30, 2022. https://ca.finance.yahoo.com/news/vancouver-housing-plan-great-in-theory-but-questions-linger-experts-153147102.html?guccounter=1

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