Divide widens between renters and owners, international buyers and locals, as the wealthy drive up the price of a piece of paradise
PETE McMARTIN
Sun
Here’s an uncomfortable question: For whom are we building this city?
Here’s another:
To what purpose have the local, long-established residents of this region paid some of the highest taxes in the world to keep the air clean, the water pure, the streets safe, the parks manicured, the schools and hospitals modern and the pristineness of our unparalleled environment preserved?
“Well,” said Rick Valouche, president of the Real Estate Board of Greater Vancouver, “it’s a loaded question. And I’d hate to answer it.”
Me, too. This is dangerous ground, especially in this part of the world, where immigration has managed to revolutionize the demographics in 20 short years.
These are questions where one can find oneself wading into the quagmires of ethnicity and nationality all too easily.
But they are questions that came to mind earlier in the week at a GVRD seminar on the high cost of housing. It was there that a real estate consultant said Vancouver, in effect, was a victim of its own success, that, because our enlightened environmental and governmental ethos had made it such a wonderful place to live in the world, the world now wanted to live here. Local buyers had to compete with international buyers from Asia, the U.S. and Europe, he said, and those international buyers often had the advantage of lower tax regimes and less stringent environmental and labour controls in their home countries. Wealthy foreigners could make their fortunes outside of Vancouver, then buy a piece of paradise here.
Exactly how much of the market is now taken up by international (or out-of-province) buyers is not known precisely, because real estate boards have always been touchy about tracking buyer origin. That quagmire thing.
But this may soon change.
There have been so many questions about the subject, and the issue has become so prominent, Valouche said, that the board has started to try to put together a database that would track buyer origin. Privacy issues are a concern, he said, but a system might be up and running in “a year or two.”
In the meantime, all of the information on buyer origin is anecdotal. There is some uniformity to that evidence, however.
Valouche said that in his business, Amex Broadway West Realty, which has a staff of 190 people and a region-wide reach, “25 to 30 per cent are not local buyers.” Bob Rennie, the condo king, gave a similar figure of 25 per cent on “signature, high-end properties” — most especially on downtown, waterfrontview properties. In some companies, which target the offshore market, however, the percentages are much higher. Manyee Lui, of Macdonald Manyee Lui Realty, and who specializes in high-end West End and downtown properties, said 70 to 80 per cent of her clients came from outside of B.C.
This is an enormous slice of the pie, whichever way you cut it. And all the realtors and developers I talked to said that, yes, competition from international buyers for the limited supply of existing housing stock had contributed to the high price of housing here.
And Rennie — to his credit, I thought, because, after all, it’s his livelihood — said he saw that effect on the market as “a double-edged sword.”
On the one hand, he said, there is a natural amount of resentment.
“We’re always jealous of people that have more than us.”
On the other hand, Rennie said, those buyers are creating wealth and local jobs, and contributing to a more vibrant cultural scene. Vancouver is richer for them.
This is undeniably true, and often overlooked. (I remember getting a phone call some years ago from an elderly gentlemen who had just sold his Kerrisdale home to Hong Kong immigrants for a huge sum, but he was upset that his old neighbourhood was changing so quickly. Our conversation was shortened when I asked him if anyone had put a gun to his head to force him to sell his house to them.)
But I would argue that the Vancouver area becoming richer is true only for some of us, and that wealth is not always measured by dollars and cents.
According to the GVRD’s February, 2006 report on affordable housing, the income needed to afford an averagepriced condo in Greater Vancouver was $67,000. For a townhouse, it was $81,000. For a detached home, it was $122,000.
For local middle-income families, that means carrying onerous mortgages. On average, homeowners in the Greater Vancouver area devote 56 per cent of their income to household expenses. That is easily the highest in the country.
But for renters, the situation is even more dire. According to the GVRD report:
“The average household income for renters is approximately half that of owner households, and disparity in income levels has continued to increase over the last 20 years. The disparity in wealth (measured by assets or net worth) between owners and renters also continues to grow. Combined, these growing disparities translate into markedly different affordability thresholds for owner and renter households, and for the ability of renters to move into home ownership.”
In other words, the place we used to know is fracturing along fissures in the housing market, between the local city and the global one, between the owner and the renter, and those fissures are getting bigger, not smaller.
Harder to call a place home, I’ve always thought, when you have a house divided.
Have an opinion on housing in Greater Vancouver? If so, contact me at [email protected] or 604-605-2905.
