Vancouver housing paradox: Costly to buy, cheap to own
VANCOUVER Got a million dollars to plow into real estate? Vancouver’s a great place to park it, thanks to a property-tax rate that’s the lowest in both Canada and the U.S.
The owner of a $1-million home in the Pacific Coast city will pay just $2,468 a year in property tax, compared with $6,355 in Toronto or more than $10,000 in Ottawa, according to a new study by real estate website Zoocasa that looked at rates in 25 major Canadian markets.
Vancouver’s 0.25-per-cent rate is still the lowest even when stacked up against what homeowners pay south of the Canadian border. Honolulu, at 0.31 per cent, had the cheapest rate among the 100 U.S. cities surveyed by the Lincoln Institute of Land Policy. So on purely a property-tax basis, the annual cost of owning a home in Vancouver is roughly half that of Toronto (with a 0.64 per cent rate), a third that of Seattle (0.84 per cent), and almost a fifth that of San Francisco (1.16 per cent).
“If I was somebody who wanted to park cash somewhere and just wanted low carrying costs, Vancouver has historically been a great place,” said Thomas Davidoff, a housing economist at the University of British Columbia’s Sauder School of Business. “We are a ridiculous outlier. We’re off-the-charts low.”
The trade-off ? Houses are more expensive to buy.
The city ’s light property-tax burden has been a significant incentive for speculative investment, especially in high-end homes, according to Rhys Kesselman, an economist and public-policy expert at Simon Fraser University in Vancouver. In turn, “it’s likely one factor in driving the stratospheric prices,” he said.
Speculative cash, some of it from abroad, has helped make Vancouver one of most expensive housing markets on the planet, with prices doubling over the past decade. That’s put homes out of reach of much of the local population, whose wages haven’t kept pace.
Meanwhile, July proved to be a lousy month for Vancouver realtors — the worst in almost two decades.
Sales were down 30 per cent from a year ago to 2,070 units, the fewest transactions in the month since 2000, according to data released Thursday by the Real Estate Board of Greater Vancouver. Buyers are being deterred by rising mortgage rates and benchmark prices that remain over the onemillion dollar mark.
The board said the benchmark price for all residential properties was just under $1.1 million, a 6.7-per-cent hike over July 2017 but a slip of 0.6 per cent since June.