Pete Fry: Housing crisis is a failure of government, not the fault of investors
Editor's note: Pete Fry, the Green candidate in Vancouver-Mount Pleasant, gave a speech today (June 24) during a rally at Library Square organized by Vancouverites for Affordable Housing. What follows is the unedited prepared text of Fry's speech.
My name’s Pete Fry, and I’m the BC Green Party candidate in the provincial riding of Vancouver-Mount Pleasant—where we’ll be holding a special by-election to replace Jenny Kwan now that she is running in the federal election.
Last year, I ran for Vancouver City Council, and while I wasn’t elected: I did receive a lot of votes, especially considering it was a low budget and non-developer funded campaign. For those of you who aren’t familiar with the campaign—I ran on issues of community, environment, transparency, and affordability.
And it’s those same issues that bring us all here today.
We’ve all heard anecdotes about global capital and foreign ownership. I recently wrote about the market externalities affecting my own community of Strathcona. A well-financed west-side investor set about purchasing a number of homes in the neighbourhood: in cash, with no subjects or conditions, and always over the asking price.
Strathcona has a limited land base, maybe 350 detached homes in all, and this particular investor may have purchased a dozen of them—about 5 per cent.
Coincidentally, five per cent is about the same number that the BC Real Estate Association claim as the relatively insignificant amount of foreign ownership in Vancouver. A little higher at 5.8 per cent is the Canada Mortgage and Housing Corporation’s figure for percentage of foreign ownership in the downtown peninsula.
Back in Strathcona, the effect of that five per cent unfettered non-local capital was to drive up the median home value, to the point that locals were priced out and the average house price increased with each bidding war. In turn, the increased demand for the limited stock of housing led to more speculation, and higher asking prices.
A lot like Vancouver as a whole.
In that respect, our real estate market is like a closed ecosystem. Finite resources exist in a delicate equilibrium; and externalities—in this case the influx of non local capital—can profoundly upset that balance, and lead to unintended consequences.
Like that closed ecosystem analogy, the externalities are not unlike climate change, where even a few points of a degree of temperature increase can have catastrophic effects on weather, and aquaculture, and economic sustainability, and communities, and so on: a cascading litany of catastrophic consequences.
Also like climate change, many of our leaders and those who are profiting from the status quo remain in denial about what is happening.
That’s what we’re seeing today—externality driven housing prices profoundly out of synch with local incomes; the real threat of a generational brain drain and the inescapable conclusion that without intervention, our city is faced with severe social and economic consequences.
For several years, respected urbanists and researchers have been warning of global capital upsetting our housing equilibrium. In the last several months, the BC Chamber of Commerce and VanCity Credit Union have cautioned that our affordability crisis is leading us to a dangerous and unsustainable future. Yet still, some in our government, development and real estate industries dismiss these concerns as at best anecdotal, at worst racist and xenophobic.
Of course, racism, xenophobia and bigotry have no place in this important conversation, nor will they in the necessary solutions.
As for anecdotes; it could be said that the antidote for the anecdote is data, and that’s true—but we also need action.
Time is a luxury we do not have. We needed that data yesterday. Indeed a recent revelation in Douglas Todd’s Vancouver Sun blog: the former director of Land Titles revealed that we actually had that data yesterday—detailed information about corporate and foreign ownership in B.C. that was collected and stored for twenty years without any analysis. Even more shockingly, that data was apparently destroyed when they ran out of room to store it.
Global real estate managers Knight Frank have named Vancouver a top property investment, they refer to it as a “safe haven market” for migrating wealth from economic or political crisis situations. Fund managers around the world are advising Vancouver is a great place to park your money, superior to gold and other commodities. As urbanist Andy Yan aptly describes it, we have become a hedge city.
Around the Pacific Rim, similarly desirable global destinations have enacted protocols to leverage global investor capital and protect local populations: China, Hong Kong, Singapore, Australia, New Zealand—as of last month our region now stands virtually alone as an attractive target for the unfettered flow of global investment.
This isn’t the fault of global investors—it's the failure of local government.
British Columbia collects some $1billion annually in property transfer taxes—taxes that are largely borne by our astronomical real estate prices, and at the expense of our local affordability.
Those taxes go toward the province’s general revenue—when in fairness, they should be redirected back to the municipalities that are generating them. Let the municipalities determine how best to spend that revenue: in some cases it may be a rebate to encourage foreign investment, but in the case of Vancouver and our urban centres, I’d suggest it be channeled into affordable housing.
That’s just one solution, one of a several we should be employing on a provincial level. Mayor Gregor Robertson and Bob Rennie’s recent suggestions of a speculator tax will be helpful in addressing the issue of quick-sale house flipping for profit. We also should be including a foreign investment duty, as well as a luxury property purchase duty as part of a robust toolkit of measures to protect our local affordability.
If we look around at the pace of development in Vancouver, we see rezoning for more growth and densification as a means to extract Community Amenity Contributions. Increasingly as senior governments offload the responsibility of building housing, cities are turning to these contributions as a means to provide affordable housing. Last year in Vancouver, these CACs amounted to some $232 million—over half of which was directed to affordable housing, at the expense of things like parks and community centres.
In order to extract Community Amenity Contributions to build affordable housing, the city must rezone the land and in the process increase it’s value—and thereby increasing the value of the surrounding area. It’s a process referred to as “land-lift” and precipitates a vicious cycle of higher prices for property in order to subsidize affordable housing that can’t possibly be built fast enough. It’s clear our city can’t go it alone—we need senior government intervention.
Vancouver’s crisis of today is Victoria’s crisis of tomorrow, and quickly spreading to other regions of our province, particularly as Vancouverites are priced farther and farther out of the city.
Some will argue that any sort of market intervention may have deleterious effects on existing homeowner equity.
I’d argue that gentle intervention now and on our terms is preferable to hard intervention that might come in the form of global collapse or rising interest rates that would find many Vancouverites dangerously overextended and risk a housing continuum that includes not just primary home ownership, but private rental stock as well. We don’t want to pop the bubble, just deflate it a little bit.
This is why we elect governments, to provide sound fiscal management and regulation—not to operate hands-off like the Wild West.
Today, gathering together, this movement is a good start, pressuring the political will to act and to respond. We need to keep up that pressure.
We have a federal election coming—talk to your prospective MP. We need a national housing strategy. Let’s get the Government of Canada back into building housing.
My by-election is in six months, but there will be a general provincial election in 2017. The province has the ability to leverage property taxes to protect and enhance affordable housing—we need to keep advocating for that.
I’ll add one final notion to consider; while the grim prospects for middle class home ownership have captivated the media, galvanized the public, and panicked the politicians—for a number of Vancouverites, affordable home ownership will never be an option. For a number of Vancouverites, even secure affordable rental housing will never be an option. We all need to come together united to ensure housing justice for all Vancouverites. As they say: a rising tide lifts all boats.
There’s a wonderfully pithy piece of public art just down the street, it was commissioned of artist Kathryn Walter by the Contemporary Art Gallery back in 1990. It’s a text-based work, fronting The Del Mar Hotel. The Del Mar is an affordable housing building that famously held out when BC Hydro was redeveloping that block in the 1980’s, and now sticks out like a quaint Edwardian brick anachronism, surrounded by glass and concrete towers. I use that image on my social media as a poignant reminder of what is at stake.
It reads simply “Unlimited Growth Increases the Divide”.
It was true then, it’s true now, and it will be true tomorrow—let’s not let it be our city’s epitaph.
Jun 24, 2015 at 8:53pm
migrating wealth from economic and political crises sounds a lot like money laundering bribes. People on incomes will never be able to compete in that market.
Jun 24, 2015 at 9:31pm
This article appeals to me as a civic minded property owner, but its arguments are somewhat confounding. Is this a hedge market for the world's wealthy, or is the foreign ownership issue a matter of under ten percent of sales?
If the latter, then domestic ownership is the problem, if ownership can be said to be a problem.
And unless the minimum wage has been increased to $100,000 per year, people are getting mortgages. So, mortgage lending policy is the key to choke off home purchases, and that would be an issue for which level of government? The city? No. The province? No.
I do appreciate you focusing on affordability but one thing you haven't got into and I suspect no politician would get into is to put the blame where I think it belongs: on people like me, who own the houses.
The owners do what they want. You wanna increase the taxes? Go right ahead - guess what will happen to the asking price!
I would like other landowners to voluntarily be good citizens and to pass on our homes to the next generation at a rate they can afford. I'm not holding my breath for that.
Jun 24, 2015 at 9:42pm
Sorry, I don't need a central soviet mucking with the value of my land.
Absolutely right, Pete
Jun 24, 2015 at 9:57pm
I wish I lived in Vancouver so I could vote for you but I'm priced out & heading further east to Pitt Meadows.
Jun 25, 2015 at 10:48am
"The province has the ability to leverage property taxes to protect and enhance affordable housing—we need to keep advocating for that."
Can you please define these terms, they're quite blurry:
- leverage property taxes
- enhance affordable housing
Jun 25, 2015 at 10:53am
It's an issue of high demand/low supply.
Just review the RBC affordability report - look at the two graphs at the end for Vancouver.
We need more supply of social housing and rental stock. But it seems that your party is averse to development or more people living here.
Unaffordable housing = transit by TransLink
Jun 25, 2015 at 12:22pm
Unaffordable housing in Vancouver correlates strongly to the over-densification along subway lines. Transit by TransLink is the major cause of the lack of affordable-detached homes in Vancouver; transit by TransLink has contributed greatly if not exclusively to the housing crisis in Vancouver. Both Vision and TransLink are terrified that people are starting to connect the dots to see this. In other words, more subway transit by TransLink = less affordable housing. This is not what Vision and TransLink want people to know.
Condo suites along s-train and subway lines are marketed internationally to wealthy individuals. In effect, the peasants (Canadians) are being driven out to Surrey and Delta for developers to buy up single family homes to in turn deplete the stock of affordable housing in Vancouver and to drive up the cost of housing through price wars amongst greedy developers fighting for properties along subway lines. Fascist Gregor “Benito” Robertson and his developer buddies are the real culprits of the unaffordable housing in Vancouver.
Rising housing prices in Vancouver have the following domino effect: increased housing prices and urban sprawl throughout Metro Vancouver. More people living in Delta and Surrey has resulted in our worsening road congestion – worst in Canada – as more people are on the freeways in cars, and not less.
TransLink does not want this to be known.
Jun 25, 2015 at 3:24pm
In the city of Vancouver, publicly owned housing amounts to 3% of supply. The city of New York,
6%. City of Stockholm 30%. Housing affordability has not been properly addressed in this city, because the politicians are so disconnected with the lifestyle and needs of the majority of the population they have spent the majority of their time and resources on other issues.
The issues of affordability for renters and potential homeowners in Vancouver haven't even been studied by any level of government, much less had any serious action. The federal government stopped funding public housing twenty years ago. Ever since, governments have pointed the finger at each other, while the crisis grows.
Politicians and commentators are quick to point out the lack of data on foreign ownership of Vancouver real estate. Since affordability has been such a serious and seminal issue for so long, you would think that it would have been comprehensively studied a long time ago, and measures taken to make sure that we have a city that is accessible to some families and individuals of all income levels. This is how you build strong communities.
Other major cities with high housing costs and significant inflows of foreign capital have intervened in the market with policies and taxation measures designed to address the issue. To even suggest this in Vancouver is greeted with screams of "no evidence" "racism" "we have to let foreigners buy or we will be shut out of home ownership in other countries."
The lack of concrete action by any level of government shows the serious disconnection between the real issues faced by all Vancouverites (certainly housing affordability affects everyone to some degree) and their elected representatives. No wonder electoral participation is declining.
Jun 26, 2015 at 5:53am
Editor's note: 400 ppm is unaffiliated and running for nothing. 400 ppm tends to speak sincerely and factually so will likely be censored, if not censored ignored, if not ignored receive many thumbs down. 400ppm doesn't own a suit.
"Also like climate change, many of our leaders and those who are profiting from the status quo"... are continually re-elected by The People and the democratic process, which The People don't want changed. So I may as well spout some populist mumbo-jumbo and get my snout in the trough because it's how our obsolete electoral process works, what The People want.
Jun 26, 2015 at 9:23am
The problem is that different classes have different interests, and the Canadian working-class socialist view that "everyone would think the same if they really thought long and hard about it" is ridiculous. If I have land title, it is in my interest for its value to increase, unless that causes issues with my paying property taxes.
If you don't own land, of course you don't want prices to go up. The idea that landless peasants get to simply impose their will on noble landholders is disgusting.