Mike Taylor: Vancouver Millennials bear responsibility for housing unaffordability

Written by a Millennial for Millennials

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      If you are between the ages of 18 and 35 and living in Greater Vancouver, chances are you are frustrated about the unaffordability of our real estate market. And you should be when hearing news that “the average price for detached homes within the city of Vancouver has rocketed to a record $2.23-million” or that we have “the second most unaffordable housing market in the world after Hong Kong”. But here is the thing: the fact that the Vancouver real estate market has gotten this bad falls to a large extent on our shoulders. This is a provocative statement, but hear me out because this has a direct impact on us Millennials.

      Just this June, Vancouver mayor Gregor Robertson urged the provincial government to consider a tax on luxury homes. He argued that wealthy investors in luxury housing and property speculators are key contributors to rising house prices. In his letter to Premier Christy Clark, he asked for a tax to punish speculators who flip houses to gain a profit and to give the city government the ability to fine property owners who keep empty units as investments.

      To put it in context, all of the mayor’s requests are proactive and sensible given Vancouver’s high housing prices. But not in the opinion of Christy Clark, who outright rejected all of the proposals in a response letter to the mayor. Clark stated that such a tax could wipe out billions of dollars in peoples’ home equity. She also suggested, using data from the Ministry of Finance, that there is little evidence wealthy or foreign investors are driving housing unaffordability.

      To break down the rhetoric, Clark is correct; such a tax would have an affect on home equity. That means Baby Boomers who own homes (which for many of us includes our parents) would lose some of the value on their homes because the housing market would go down. But this would be great news for Millennials, as it would be one step, however big or small, in making the housing market more affordable. Of course, Baby Boomers would be taking a small hit, but it is hard to be sympathetic considering the real estate profit wave they rode the past few decades. Take the example of my parents, who purchased a home in Greater Vancouver for about $170,000 in 1987. Today, their property is now valued at approximately $1,000,000. Safe to say, most of the people who bought in the ’80s and ’90s are doing just fine.

      Secondly, the so-called data Clark uses to support her claim that wealthy or foreign investors are not driving housing unaffordability is biased and incomplete. The finance ministry states they have “not reached final conclusions about the impact of foreign investment in B.C.’s real estate sector”. Clark herself admits there is a lack of data, yet used a study by the B.C. Real Estate Association, which stated offshore investors had a negligible effect on the housing market (this study comes from the real estate industry—clearly biased on the issue). Most academics that have studied the topic for years, in contrast, blame global investment for driving up prices.

      In addition, the Ministry of Finance is relying on apparent “industry experts” to reach the conclusion that “non-residents likely make up less than 5 per cent of home sales.” To most, five percent seems too low to be considered a realistic figure. And while the ministry states it is “an area we continue to study”, the provincial government continues to put up roadblocks to data collection by: (a) refusing to specifically track off-shore investment in real estate, unlike many regions in the world; (b) not collecting as it once had, a statement of citizenship from the new owner of each property.

      So why would our premier shut down the mayor’s proposals, suggest that foreign investment is not a key factor in rising house costs, and not take steps to increase transparency and data collection in B.C.’s real estate sector? The answer is simple: she is protecting the interests of those who vote for her and the B.C. Liberals. The majority of people that voted her into power are the Baby Boomers and seniors, who have already paid off most, if not all, of their mortgage and are now reaping the benefits of rising real estate prices.

      But what about the interests of Millennials? Young people in Vancouver, many of whom have large student debt, face a competitive job market and find it difficult to save with the city’s high cost of living. Well, Christy Clark does not have to worry about us because we represent a very small segment of the B.C. vote. This is not because we lack the numbers, but because most of us simply do not vote in elections.

      Unfortunately, it usually takes a generation some time and maturation before coming to the realization that as a large proportion of the electorate, they can influence government decision-making to reflect their interests. For example, why are most of the government’s current economic policies conservative (the root of the word, meaning to conserve things the way they are and maintain the status quo)? Well, because older folks in B.C., particularly when it comes to the real estate market, like the current status quo because it benefits them. And they make sure to vote.

      However, there could be an upside, and a real opportunity to be had here. Things are changing in the social media landscape. The sharing of articles on Facebook and the exchange of ideas and opinions on Twitter or blog sites like Tumblr are increasing the political awareness of Vancouver Millennials. Take, for example, the “Om the Bridge” event, in which Christy Clark scheduled yoga on the Burrard Bridge. The public’s questioning of the event, particularly on social media, forced Clark to cancel the event. And with many of us waking up to the alarming cost of real estate in Vancouver, we need to be unafraid and willing to stay engaged and informed on the topic. We need to follow the lead of Millennials like Eveline Xia, founder of the #donthave1million affordable housing campaign, who used Twitter to express her frustrations with Vancouver’s unaffordability, and in the process became a spokesperson for the cause, which has received extensive media coverage and the attention of some federal politicians.

      Let’s put pressure on politicians at every level of government (provincially, federally, and municipally) and make it known that we are serious stakeholders on this issue by voting when the time comes, staying informed, and participating in the conversation of finding solutions. Being apathetic and sitting on the sidelines makes us just as responsible as policy makers.

      Comments

      28 Comments

      Well...

      Jul 2, 2015 at 5:37pm

      This millennial is staying the hell away from the Vancouver market. I think that my generation will have to let go of the white picket fence dream that our parents had and be more realistic. You don't have to live in Yaletown to be happy!

      Buddislander

      Jul 2, 2015 at 7:10pm

      Vancouver is heading in a direction that will exclude many from living there.
      Many workers will begin to live and work elsewhere. Who will serve the wealthy?

      Anonymous

      Jul 2, 2015 at 7:13pm

      Well said! We need to share this article and pass along the message!

      Greg Chalmers

      Jul 2, 2015 at 9:43pm

      Both points you are trying to make - Millennials should vote and become more involved in politics & that foreign investment in housing needs to be slowed are very debatable, because as you point out, we the people have the power to change both of these issues, yet we, the free market of democracy choose to do nothing, and have the market operate "laissez-faire" - why? Because it works!!!

      I believe we as a society choose to do nothing, because the risks involved in a luxury tax far outweigh the benefits. It is selfish and very short term to demand that government intervenes to lower equity in detached homes so that Millennials can afford to buy one (typical of Millennials though). Sure, our parents who bought in the 1980's will be fine losing 20% value on their home. But how about everyone else that bought in the last 10 years, who will find it easier to walk away from mortgages than pay them. The 2008 housing collapse in the US is a perfect example of what we could be looking at if this bubble bursts. Let the market rule itself. Vancouver is a top spot world-wide to live, and if housing prices are unaffordable, than perhaps wages need to increase, rather than housing prices decrease. You see this in cities like Fort MacMurray, where high real estate is accompanied by high wages. But over time this will naturally occur in the free market anyways, without government intervention.

      My opinion, we focus too much on the negatives of this situation. Foreign investments have made most of our families rich beyond their wildest dreams. My mom can now move to Colorado if she wants and buy a 2 million dollar home next to Peyton Manning… her neighbours will wonder what kind of career she had up there in Canada? Well, not much of one, but she did get rich living in Richmond. Your parents can sell their million dollar home and retire in Kelowna. Buy acreage and buy their neighbours house too which you can live in & never have to pay a mortgage payment your entire life. Better yet, start small - buy a condo yourself, starting at $200,000!

      As for why we Millennials don't vote, or aren't active in politics? I think it's because the majority of us are so busy with other things, politics just doesn't hit high enough on the radar. Maybe when we have a couple kids and watch the evening news I'll start voting but until then,… Namaste

      Your friend always,
      Greg

      Just sayin'

      Jul 2, 2015 at 9:45pm

      Why doesn't Gregor do something if he's really that concerned?

      U.S.A

      Jul 2, 2015 at 10:10pm

      Or you know.... just stop letting in these people from overseas buying 12 properties at a time with their money they earn from their businesses in Hong Kong, not even a Canadian resident. I am sick of Canada trying to be all "multicultural" when the fact is is that it is ruining our province. It breaks my heart for people to be denied jobs because they don't speak mandarin or Cantonese, but they have French as a second language. This has gone too far, I feel like an alien in my own country. It is only going to get worse and worse... I wish something could be done about the number of immigrants allowed to move to Canada... I mean I love meeting people who come from all over the world, but too much change has happened where I don't know where I am walking anymore. #WheredidCanadago?

      Frumoius

      Jul 2, 2015 at 10:49pm

      Or you could move to Seattle where housing costs are only about 60% of Vancouver's and good paying jobs are now plentiful.

      Captain canada

      Jul 3, 2015 at 12:04am

      As a lifelong resident of west Vancouver i can tell you for FACT that the community has been changed from chinese buyers. I am not a racist nor saying that people from China do not have a right to buy property in the municipality. If I was from a shitty country like China and had the money I would be all over West Van real estate. For lifelong residents of these small communities it is a culture shock to have these new residents bringing their "culture" to the community.
      The old guard of West Vancouver is not used to people struggling to shop at the grocery store, language is a definitive issue.
      There are massive issues with this new class of immigrant, in reality I don't see any blending for a very long time.

      Nelson100

      Jul 3, 2015 at 8:16am

      I agree with everything you say except " ... all of the mayor’s requests are proactive and sensible given Vancouver’s high housing prices."

      It would be wise for Millenials to realize that Vision Vancouver are wolves in sheep's clothing. They make lots of noise about housing costs but scratch under the surface and you will find that they are very much part of the machine supporting overseas money driving up Vancouver housing prices. The mayor is on record categorically denying that Chinese money has anything to do with Vancouver's housing costs, and he has made several trips to China specifically to drum up more real estate investment.

      Cam Brody

      Jul 3, 2015 at 8:32am

      Please stop encouraging social slacktivism, if you think a twitter campaign is going to change the housing market in the Lower Mainland you are sorely mistaken. The reality is, if people want Vancouver to become a truly "World Class" city it is time for our city to realize that this means increased density which means more housing inventory which thus should depress the market somewhat.