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Speculation tax a shot in the dark

When Vancouver Mayor Gregor Robertson publicly pitched the idea of a “speculation tax” as a way of taking the wild ride out of Vancouver’s real estate rodeo, he said: “It’s clear that rampant speculation on real estate is driving prices up in Vancouv

When Vancouver Mayor Gregor Robertson publicly pitched the idea of a “speculation tax” as a way of taking the wild ride out of Vancouver’s real estate rodeo, he said: “It’s clear that rampant speculation on real estate is driving prices up in Vancouver.”

Well, actually, it isn’t all that “clear.” And he now admits it.

As he told my colleague Mike Howell a few days later, when challenged: “Certainly there is a need for more data to be collected on this.” Which is to say, the mayor isn’t really sure what he is talking about. And that wouldn’t be the first time.

One can only speculate that his premature comment was meant to endear him to his political base. That would include the crowd that gathered last Sunday at the Vancouver Art Gallery to bemoan the housing affordability crisis in Vancouver. They use the hashtag #donthave1million, playing on the lyric from the Barenaked Ladies: “If I had a million dollars, I’d buy you a house.” That would have been true everywhere in Canada when it was written in 1989. It would prove challenging in Vancouver today.

Nonetheless, ill-informed as he professes to be, Robertson is knocking on the province’s door asking for a new tax.

Now, it is hard not to forget that the last time Robertson and his fellow regional mayors asked the province for a new tax, what became the proposed “congestion improvement tax” to raise money for transit infrastructure, we ended up in the pickle we find ourselves in today.

We are just wrapping up a multi-million dollar campaign to twist enough arms and pass a burdensome transit plebiscite.

It is one nobody wanted — except perhaps the Premier and the folks most opposed to the tax — and which will take a minor miracle to pass.

Why Robertson would think the same provincial government would now like to tie itself to another tax, one that would could possibly reduce the asset base of tens of thousands of British Columbian home owners and throw a wrench into a thriving construction industry, is beyond me.

And, indeed, so far Premier Christy Clark, Housing Minister Rich Coleman and Finance Minister Mike de Jong have, in their own way, said: “This ain’t going to happen.”      

Robertson’s target of this “rampant speculation” appears to be around the buying and selling of condos, which in terms of rising real estate prices are relatively flat these days.

In fact, recent reports have condo prices falling over the past five years. And as far as speculator profits go, units are apparently selling for less once built than they did during the pre-sale period.

Where prices continue to soar are among detached houses, mostly, it can be argued, not because of anything the province controls but because of Vancouver’s zoning bylaws.

Those bylaws allow a contractor to buy a small house, tear it down and build something almost twice as big. Usually it houses, by the way, the same number of folks as the small house.

While Robertson’s proposal to — borrowing a line from the French Revolution — “eat the rich” may have political appeal, his solution is hardly practical.

Regardless of the cause of the escalating value of land, attempting to define who is a speculator, who is an investor, who is a resident and just how long people actually spent in their homes each year, would require a spy network that would challenge CSIS.

As we struggle with housing affordability in this city, we have created a number of urban myths. Number one among them is that the folks gobbling up all those condos to make big profits are mostly from Asia.

Vancouver’s best known realtor, Bob Rennie, blew that one out of the water during his talk last week on affordability to the thousand or so folks attending the Urban Design Institute luncheon. He provided data from 2,307 condo sales at four different developments he hustled space in. And he determined that three per cent of all the buyers were actually foreigners: two per cent were Asian, the other one per cent from elsewhere.

So it is it is comforting to know, I suppose, to the extent there is a problem, we are part of it. To the extent there is a solution, however, it is unlikely to be found in a speculation tax.

agarr@vancourier.com

@allengarr