The wrong solution for a serious problem

Recently, the Canada Mortgage and Housing Corp. warned that housing prices in Victoria are overheated. We are not the only jurisdiction suffering from rapidly escalating prices in real estate. In London, England, one solution is to stop illegal funds from being used to buy real estate, to control moneylaundering and tax evasion. In London, they want to compile a list of all beneficial owners of property.

Our local solution is to throw away the zoning and disregard the official community plan. Forget traditional norms to build more — flood the market with housing, this will lower the prices.

But this response, tried without success everywhere else, appears only to raise prices and lessen the availability of housing. Densification increases the prices, and worsens the vacancy rate. This is not appreciated by Victoria’s mayor and council.

In London, they recognize that housing is no longer used “just for housing.” It has become something else: an unregulated financial asset, a new asset class. Housing can be “built to the hilt” for a luxury premium. Housing can be built in smaller dimensions to lessen the price point, attracting a higher premium over cost.

It can be traded, bought and sold for profit on a regular basis. Housing can be bought and held for speculation. Housing can be bought using foreign funds to protect one’s wealth from depreciation in another currency. And housing can be used as a way of hiding illicit funds and evading tax.

All of this brisk financial legerdemain is aided by the leverage available through mortgages, so the profits are amplified manyfold. None of this market activity is effectively regulated by any level of government in Canada.

In Canada, according to StatsCan, more than half of the condominiums built in Canada are bought as investments. This means that more than half of the housing units we build are not the principal residences of the buyers. Our success rate in building housing “just for housing” is less that 50 per cent.

By fundamentally altering residential neighbourhoods to an urban-core density, our mayor and council are pleasing an evergrowing swell of investors, speculators and their happy bankers. According to StatsCan in 2016, more than 3,400 housing units are empty in Victoria, and this, by limiting the supply, inflates the price of all housing, leaving an ever-growing portion of Canadians out of the single most important road to wealth: home ownership.

I think that calming this fury of speculation in the housing market is important. But sadly, we have only two tools to help us: the official community plan and zoning. Using these tools effectively will lessen the damage that speculators are doing to our established neighbourhoods. It will minimize the damage to the future character of our city and the individual flavour of our distinct neighbourhoods.

I think it is possible to redirect this bubbling fund of hot money to areas that are desperate for investment. Walk through the north end of downtown and ask yourself if it is fully developed. Are the rash of one- and twostorey buildings in the downtown core the measure of full investment?

There is ample opportunity for this housing downtown without casting aside the zoning of our residential neighbourhoods or emasculating the OCP. If we can’t figure out how to build housing without increasing the price of all housing, we should, at least, concentrate our efforts in an area of the city that will benefit from the investment of funds and the influx of residents.

I think it is imprudent for us to disregard the traditional zoning of long-established residential neighbourhoods. I think it is reckless to undermine the official community plan by amending it willy-nilly, in order to build multistorey condo buildings in singlefamily zoned neighbourhoods. I think it is irresponsible to react so rashly, without regard to historical norms.

We are rapidly destroying our city’s character in the mistaken belief that we are solving a problem, when we are actually creating another. We are making a mess of it.

We are raising the price of all housing, worsening the vacancy rate and impoverishing more and more families when prices continue to rise out of reach. And, in the bargain, we are destroying our neighbourhoods.

This should not be the new “normal.” I believe we can do better. But are our political leaders up to the task?

Don Cal lives in Victoria.