Mayor needs to counter myths on housing crisis
People have good reason to feel encouraged by the inaugural speech of Vancouver’s new mayor, Kennedy Stewart. At the swearing-in ceremony on November 5, he demonstrated an open mind, an open heart, and a willingness to work with people from across the political spectrum.
But here’s the problem facing Stewart as he fulfills his pledge to turn Vancouver into a “globalist city”, as opposed to a “globalized city”: the public believes that foreign buyers are the main cause of high home prices.
This was reflected in an Insights West poll in August asking respondents to evaluate a list of factors affecting the real-estate market.
The top four “primary causes”, according to the poll, were foreign homebuyers (84 percent), population growth (80 percent), shadow flipping (76 percent), and money-laundering (73 percent).
Other factors lagged far behind. Municipal zoning laws were only cited by 63 percent of respondents. Immigration was identified by 58 percent. Lack of available land checked in at 53 percent. Interprovincial migration was cited by 46 percent.
The polling company failed to ask about such things as sustained low interest rates, quantitative easing by the central bank, the millennial household formation rate, the transfer of equity from baby boomers to younger generations, B.C.’S strong economy, and the rising cost of construction.
What sensible housing analyst believes that shadow flipping is the third-biggest contributor to high housing prices? It’s absurd. But this widespread belief is possibly a factor in why nobody of Chinese ancestry was elected to council—something that clearly concerns Stewart.
The last mayor and council did a woeful job in countering public misconceptions about what’s driving up housing prices in Vancouver. They didn’t want to expend any political capital in going against of public opinion.
According to a study by the Canada Mortgage and Housing Corporation, about three-quarters of the cause of Vancouver’s high prices was attributable to three factors: income, population, and mortgage rates.
Those are outside the jurisdiction of Vancouver city council. The remainder was related to the inelasticity of housing supply in Vancouver. This is linked to the shortage of land and municipal zoning—two factors that are well within the purview of city council.
Council can also attach conditions to rezoning approvals to influence affordability. The city can require all projects to be marketed first to local residents. In addition, council can affect the permitting process, which influences the cost of construction.
Stewart is correct when he says that Vancouver can be a globalist city with proactive strategies in shaping its destiny. But it’s going to require the mayor and councillors to do far more than their predecessors in countering widespread myths about housing markets.
Public education about real-estate economics should be near the top of the mayor’s agenda. Otherwise, Stewart and the councillors will repeatedly encounter opposition from those who blame foreigners every time the city tries to advance solutions.