Across the street from a run-of-the-mill Starbucks in the Kitsilano neighbourhood of Vancouver is a two-storey Ferrari and Maserati dealership. Locals will tell you with amazement that it is the highest-volume location in North America. Whether or not that’s true, the ﬁve homeowners gathered today around a table at the Starbucks want to make clear that Ferraris are not for people like them. Though their homes on the west side of the city may be worth millions of dollars, they do not consider themselves rich. “It’s really hurtful when someone says, ‘You live in a $2-million property, so that means you’re a wealthy person,’ ” says Mary Lavin, an English teacher. “Um, no. Not at all.” Lavin points to her car in the lot, a 1998 Toyota Tercel. “I’ve had one holiday in my life.”
Premica Baines, a retired federal government worker, notes she walked here from her home in Point Grey, which is assessed at around $4.5 million. She even brought her own coffee. “The majority of the people who are not living in the neighbourhood think we have lots of money in our accounts,” Baines says. “It’s not true.”
They do, however, have lots of equity in their homes, which the provincial NDP government has moved to tax at a higher rate. The government announced a change to what’s called the school tax, a levy derived from property values that helps fund the education system. Starting next year, some residents will pay an additional 0.2 per cent on the amount by which their property values exceed $3 million, and 0.4 per cent on the portion above $4 million. (For a $3.5-million home, that’s an increase of $1,000 per year.)
The change has deeply angered the west side of Vancouver, where large detached homes perch on leafy, green lots. Residents have launched petitions, staged protests and erected yard signs claiming the tax is “hurting seniors and working-class families the most!!!!” Home values have skyrocketed in the area, but incomes have not. Those who purchased property many years ago don’t necessarily have extra cash on hand.
Around the table, there are multiple objections to the tax. Mainly, the group feels targeted because of their home values. “We don’t think it’s fair that it’s only applied to certain individuals and not others,” Lavin says. “That appears discriminatory.” Lavin bought a duplex in Kitsilano two decades ago for $500,000, and it’s now assessed at just over $2 million. The tax does not apply to her. “My concern is that it can be arbitrarily lowered to a $2-million property, which would impact me.” Recently, a UBC professor called for increasing property taxes on homes worth more than $1 million. “Personally, I’m fearful,” says Lavin.
The effect of the government’s ﬁxation on housing wealth, they say, is to sow harmful social discord. “When you single out a part of the community, and fuel that discrimination by talking about the haves and the have-nots, it’s not only bad policy, it’s bad for our community,” says Jeff Petter, who works for a medical technology company. “We ﬁnd that is morally repugnant.” (He doesn’t want to say how much his property is worth, but allows it’s “absolutely absurd.”) Baines nods in agreement. “I had dinner with some friends last night, and the person who is renting was attacking the people that were there,” she says. The renter was telling the homeowners to just sell their homes and enjoy the windfall if they were so worried about taxes. “What kind of response is that?” she says.
While the issue of housing has long strained the city’s social fabric, it’s now creating discernible tears. Owning a home here costs 85.2 per cent of a typical household’s income, the worst level ever recorded in Canada, according to RBC. Even a condo eats up half a household’s earnings. Everyone seems to feel like a victim: homeowners fretting about taxes, locals priced out and forced to move to suburbs, and those struggling to ﬁnd anywhere to live in a place where the vacancy rate is less than one per cent. There is ﬁerce disagreement over the cause of the crisis—insatiable demand or a lack of supply—and, as a result, no consensus on solutions.
As part of an effort to tackle affordability, the NDP government has opted for taxation to reduce demand. In addition to the extra school levy, the province increased and expanded the foreign buyer tax and put in place a so-called “speculation tax,” which applies to vacant homes in select regions. Finally, the province boosted the property transfer tax on high-end homes, and expanded disclosure requirements to end hidden ownership. “We ﬁnally have a government that’s serious about housing affordability and is willing to see prices fall,” says Joshua Gordon, an assistant professor in the school of public policy at Simon Fraser University. “That’s not to be underestimated as a force.”
Polls show the NDP’s affordability measures have broad support, but not everywhere. For the ﬁrst time in years, those who have ostensibly beneﬁted from Vancouver’s real estate boom—homeowners, investors, flippers and the entire industry—feel threatened. “The NDP is creating class warfare, and using real estate to drive the wedge,” fumes real estate agent Keith Roy. Someone, he notes, recently defaced lawn signs on the west side protesting the school tax, scrawling “EAT THE RICH” on them. “Homeownership is being punished,” he says. “Success is being viliﬁed.”
On a recent weekday morning, David Williams is giving a walking tour of his block in Dunbar, on the west side of Vancouver. At 64, Williams is retired from a career in ﬁnance, and he walks briskly through the quiet streets describing who bought which house when. His tour is really about how wealth—or hot money, he believes, referring to foreign capital—is transforming his neighbourhood. “The guy across the lane from us, he tore down an old house, built a whopping new house, and he had a Rolls-Royce and a Ferrari in the garage,” he says.
The trend for years has been to purchase a home, knock it down and build an even bigger one. The clash of styles—squat, old bungalows next to towering three-storey mansions—bothers him. “Here’s a brand spanking new house, built on spec. I think they listed it for eight,” he says, meaning $8 million. “It’s a f–king ugly house.” It’s rare to walk a block without passing a dumpster ﬁlled with refuse from a home construction project. And then there are the four empty homes on his street. He stops in front of one. “They can’t even pay for a gardening service,” he says, pointing to the long, weedy grass.
Williams and his wife purchased a home in Dunbar almost 30 years ago, when it was more of a working-class area. Today, their property is worth $4.4 million, but the neighbourhood feels as though it’s emptying out. “There are fewer families, let’s call it that way,” he says. Halloween once brought upwards of 150 kids to his door. Now he gets maybe 50. A neighbour of his used to collect $25 from every household to purchase ﬁreworks and put on a show once a year. Three years ago, the neighbour returned Williams’s money. Only a few households chipped in, and there hasn’t been a ﬁreworks show since.
If Williams ever sold his home, he has no doubt the buyer would knock it down. But who could even afford it? “Well, not a Canadian,” he says. “The next buyer of any of these houses here is not somebody who earns their income in this province.” Williams says he would gladly accept a 50 per cent reduction in property values if it meant that younger residents, including his own children, could buy into the neighbourhood. But he knows that will never happen. He’s read the news stories about wealthy offshore buyers, and students and homemakers who somehow own multi-million-dollar properties. “For guys like me who pay their taxes year after year, it just pisses you off,” he says. “The government doesn’t appreciate why people are pissed off.”
His fear, shared by many in Vancouver, is that the city will become a playground for a rootless class of nouveaux riches. The perception is that this trend is well under way. A few years ago, a television producer launched Ultra Rich Asian Girls, a reality series following the extravagant lives of four young women in Vancouver. (It lasted only two seasons.) Exotic vehicles are not an uncommon sight on city streets, and last year the province’s public insurer jacked up premiums on high-end vehicles since repair costs are becoming a concern. The Insurance Corp. of B.C. recently spent more than $790,000 on damage claims for a Ferrari that crashed into a utility pole. And when a nine-year-old rapper and Instagram personality named Lil Tay went viral recently, she seemed to embody the worst excesses of the Vancouver housing market. In her videos, she crudely belittles viewers for not being as rich as her, poses with Lamborghinis and in high-end condos, all while flashing stacks of cash. Her mom, as it turned out, worked as a Vancouver real estate agent.
The province’s tax measures are designed to address the very issues that so aggrieve long-time residents. By making it more expensive to own homes in Vancouver, especially for offshore buyers or those simply wanting to park money, demand will ebb and affordability will improve. Or so the government hopes. Homeowners like Williams are skeptical. Many believe deep-pocketed foreign buyers won’t be dissuaded by additional taxes. They also argue the tax measures don’t exclusively target offshore wealth, but sweep up those with local incomes, too.
Gordon at SFU argues the speculation tax in particular will bite, however. “It’s difﬁcult to dodge, and it’s not a one-time tax.” Owners of homes left vacant for at least six months of the year in Metro Vancouver and a few other jurisdictions are subject to the tax. Foreign owners and so-called satellite families (households that have high foreign incomes but little local earnings) pay two per cent on the value of their properties, while others pay one per cent. Some may opt to sell or rent out their properties. The province has not said how it will deﬁne a satellite family, nor how many households are actually in this situation. But studies have found tens of thousands of wealthy immigrants have arrived in B.C. through programs that offer permanent residency in return for investment. A 2014 federal report of a defunct program found business immigrants declare “considerably lower” personal incomes than those who arrive through some other programs.
B.C. Liberal Leader Andrew Wilkinson says satellite families are unfairly maligned. “If they are Canadian citizens, on what basis are you going to say this is an invalid way of life?” he says. “Suppositions are made based on the ethnic appearances of people, that somehow they are this class who are predatory speculators,” he says. (Asked about what responsibility his party, in power for 16 years, bears for the affordability crisis, he demurs. “To look into the past and look for scapegoats serves no purpose,” he says.)
Supporters of the NDP’s new measures contend they are part of a necessary shift in the province’s approach to taxation. “We had a tax system that told the world to come buy real estate here, but don’t work for a living,” says Tom Davidoff, a professor at UBC. Property taxes are relatively low compared to other cities, creating an incentive to buy real estate, but not earn or accurately declare local wages, avoiding the brunt of income taxes. Davidoff says the NDP’s tax measures ﬁnally start to address this problem, though it’s necessary to tilt the scales even more aggressively by cutting income and sales taxes, and raising property taxes further. Politically, that would be difﬁcult since it places a bigger burden on seniors who have accumulated a lot of housing wealth.
Already, the reaction to the school tax shows what awaits politicians who wish to tackle that issue—even when steps are taken to forestall blowback. Those over 55 years old can defer payment of the school tax until a property is sold, for example. Given the rapid price appreciation in Vancouver, the amount of tax due is likely to be a very small portion of the sale price. But to opponents, deferring is like taking on government-mandated debt. “I don’t want to be borrowing,” says Sepideh Ziabakhsh, who owns a $4-million property. “I mean, I have,” she clariﬁes. Ziabakhsh and her husband have a mortgage on their west-side home, which they bought 12 years ago. They also recently drew down from a line of credit to fund a much-needed kitchen renovation. “I’m an optometrist and he’s a lawyer. You would think we have it made, but we don’t,” she says. Ziabakhsh and her husband are not yet in a position to defer, in any event. “If they keep increasing taxes, they’re going to push us—who are middle-class—out of our homes.”
Davidoff himself is a target for his support of the new measures. One angry homeowner wrote a letter to his neighbours denouncing Davidoff as a “socialist” and encouraged them to write to his employer to muzzle him. Davidoff wasn’t expecting that kind of reaction, but he’s also not completely surprised. “Back in college,” he says, “someone once told me real estate brings out the worst in people.”
Darren and Hannah have seen the same real-estate-fuelled rage, but for different reasons. The young Vancouver couple run a blog called City Duo, which recounts their experiences supporting new housing developments. The pair often attend open houses and council meetings related to residential real estate proposals to support development. Although they’re homeowners, they have friends who have struggled to ﬁnd rentals, still live with their parents or moved away due to the region’s housing crunch. More supply of all kinds, they believe, can help. “We believe it’s important for people to know what’s going on so they can have their say,” Hannah says. But the anti-development vitriol is so intense they use pseudonyms online.
People have told them off, screamed at them and come inches from Darren’s face. “There were a couple of times I was concerned I could get hit.” At one open house for a proposed rental building on the west side recently, some attendees demanded city staff throw them out since the couple didn’t live in the neighbourhood. At the same meeting, one man likened the development to a “forced abortion.” The proposal called for 12 units.
Why some residents of a region in the midst of an affordability crisis would oppose development is puzzling to Darren and Hannah. The couple categorize the resistance into three broad camps: those simply afraid of what change will bring; those who feel development plans have been forced on them; and ﬁnally, people who simply don’t want change. “They’re in it for their own selﬁsh desires,” Darren says. “They’re happy that their property values have gone up. They bought into exclusivity and feel they’re entitled to it.” While that attitude isn’t exclusive to the west side of Vancouver, neighbourhoods replete with detached homes tend to be the most vocal in opposing increased density. (Ironically, many west-side neighbourhoods have seen their populations decline in recent years.)
Support for development has come at a political cost for Hector Bremner. He won a Vancouver council seat last year for the Non-Partisan Association, a local political party, running on a pro-development platform. But in May, the NPA board rejected his candidacy for the mayoral election later this year. There were concerns about conflicts of interest, since Bremner works for a media relations ﬁrm that represents developers. But Bremner claims he was turned away for his views on housing. “It had everything to do with it,” he says. “There was a takeover of the board of, essentially, anti-housing people.”
Bremner is forming a new party to tackle Vancouver’s housing crisis, and development remains a key pillar. “We are not going to tax and ban our way to prosperity,” he says. The city has made progress in allowing laneway homes and basement suites, but Bremner argues that’s not enough. “Families deserve more than raising their children in the basement suite of some 70-year-old house,” he says. With no city-wide development plan, growth happens on a piecemeal basis. If residents had more certainty about how their neighbourhoods will develop, and that the necessary services and amenities will be there to accommodate new residents, there would be far less tension, he argues.
Indeed, opposition to development can’t be reduced to NIMBYism. Developers have a bad reputation in some quarters. Westbank, for example, is helping spearhead an outﬁt called Creative Housing, which has the goal of constructing 50,000 rental units in Vancouver and Toronto. Meanwhile, an ad for a Westbank condo called the Butterfly appeared in a Singapore newspaper in February playing up the investment opportunities. The ad trumpeted a 13.5 per cent capital appreciation, while highlighting Vancouver’s low 0.9 per cent vacancy rate. (Westbank says the majority of the units were bought by locals, and those sold abroad were purchased by new immigrants to Canada, not investors.)
Number of Vancouver homes worth over $1 million skyrocketed from 2014 to 2018
The criticism is that developers build not to house people but to maximize proﬁts from investors, speculators and the wealthy. Metro Vancouver’s housing stats lend some credence to that view. In the past 20 years, the region averaged 1,411 market rentals and 421 social housing units. That compares to 16,489 houses, condos and the like for purchase.
These pressures are coming to a head in Vancouver’s Chinatown district. Melody Ma spearheads a group called #SaveChinatownYVR that aims to fend off “predatory real estate developers and speculators,” according to its website. Unchecked development risks erasing Chinatown, and a signiﬁcant part of Vancouver’s history and culture, the group argues. Walking through the neighbourhood, Ma points out all the ways development has already altered the character of the area. Many of the newer residential buildings, in an attempt to blend in, feature red accents (“Red, China—get it?” she deadpans), while a large green lantern sits awkwardly atop another building. “That actually looks like a mosquito lantern to the rest of us,” she says. Such ersatz features ring hollow, she argues, while the buildings risk displacing long-time Chinatown residents, many of whom are low-income seniors.
“This building is just a big block of gold,” Ma says of a rental complex on the eastern edge of Chinatown. The building’s gold trim seems to glitter in the sun. During construction last year, a ﬁrewall collapsed and damaged the small building next to it, which housed the Lee’s Benevolent Association of Canada, a clan association and social club. The group had to temporarily move out. Meanwhile, a 430-sq.-foot unit in the building, which is marketed with the slogan “Where Eastern culture meets Western living,” goes for $1,700 per month.
In 2014, only 23 per cent of houses were worth $1 million, now it’s 73 per cent
Last year, Ma and other community groups vigorously fought a nine-storey condo. Vancouver’s permit board rejected the proposal, the ﬁrst in 11 years. The site is an empty lot surrounded by a chain-link fence today. Just down the street is a sleek showroom for another condo called Sparrow. She points to the scale model of the condo inside the showroom, which resembles a luxe boutique hotel. “Who is this really for?” she says.
The question might be applied to all of Vancouver. “We’ve had 16 years of a government that refused to do anything on the housing ﬁle, except build and build market housing,” says Andy Yan, director of the City Program at SFU, referring to the B.C. Liberals, now in opposition. Meeting at an east Vancouver café, Yan pulls out his laptop and opens a presentation he gave recently to an affordable-housing conference. One slide shows the percentage of homes worth more than $1 million in Metro Vancouver. In 2014, the ﬁgure stood at 23 per cent, represented by a cluster of red mostly conﬁned to the west side. Yan flicks through each successive year, and more areas bloom bright red. As of this year, 73 per cent of single-family homes soared above $1 million. “We could have made certain circuit breakers, and we wouldn’t be in this mess,” he says.
Yan knows how divisive conversations around Vancouver real estate can be. For years, he was amassing research showing the influential role of foreign capital, predominantly from the Asia-Paciﬁc region, and how the market detached from economic fundamentals and even our conception of what housing is for. Yan’s ﬁndings were met with skepticism at best. He was even accused of fuelling xenophobia. He likens the reaction to climate change denial.
But the recent government policies are a start, he says. He would still like to see a tax on flipping, but the measures offer at least some hope that property in Vancouver will become less of a commodity, and homes will just be places to live again. To get there, prices must slow, wealth must be taxed, neighbourhoods must densify—not just with condos, but affordable rental and social housing stock, too. “It’s a test of civic virtue,” Yan says. “What community can be built from what we’re willing to sacriﬁce? That’s the test.”
MORE ABOUT REAL ESTATE:
- Lil Tay talks like she’s the family breadwinner, and that’s disturbing
- The people who bought at the peak of Toronto’s real estate bubble, and then lost hundreds of thousands within months
- A look at some of the Toronto area homes that suffered huge price declines in 2017
- Why everyone should buy real estate in…Brantford?