Crunching the numbers of condo affordability across the world

Justin da Rosa
Canadian Real Estate Wealth

Think you have it bad in Toronto and Vancouver? One agency show it can be a lot worse in its analysis of condo affordability around the world and concludes investing in Toronto will continue to provide major gains for investors

“With stats from BILD and Altus Group showing 1,880 high-rise Toronto condo sales within the month of August 2016 alone, we decided to look at how condos fit into the mix in the Toronto market, compared to affordability in other cities around the globe,” condos.ca wrote in its report, entitled Comparing Condo Affordability on a Global Scale. “We compiled the following research and concluded that based on this data, the Toronto condo market is not actually overinflated relative to other major cities. It’s a hot market that’s for sure, but not overheated.”

The report focused on 18 different cities – from Toronto, Chicago, and New York City, to Paris, Geneva, London and Hong Kong – and found that Toronto is on the low-end of cities facing affordability issues for condos.

It was the third most affordable city in terms of average price per square foot (at $518). That’s a relative steal compared to Vancouver ($900), Paris ($1,584), New York ($1,824), and Hong Kong ($3,086).

The agency also crunched the number on condo cost in relation to average income.

“In Toronto, your average condo price is $440,300 with an average income of $49,795, which means an affordability ratio of nine years. This can give us an idea of purchasing power based on how much salary the average Canadian makes each year,” condos.ca said. “Comparing Toronto to Paris, for instance, we see a significant difference in affordability. With similar populations and the same average income in each of these two cities, it’s shocking to see that Paris’ average condo price sits at $1,346,400 with an affordability rate of 27 years.”

Vancouver’s affordability rate is slightly higher than Toronto’s at 15 years, but still a relative steal compared to Rome (17), New York (22), Moscow (40), Singapore (41), London (48), Shanghai (57), Hong Kong (83), Mexico City (101), and Mumbai (196).
Condos.ca concluded that purchasing condos will continue to be a sound strategy for investors.

“The Greater Toronto Area (GTA) is projected to be the fastest growing region of the province, with its population increasing by over 2.8 million or 42.9% to reach almost 9.5 million by 2041,” it said. “With this predicted population boom, condominiums are going to be a much needed source of accommodation, since there simply is not enough land to continue to develop freehold family homes in the downtown core.

“With steady population increase, matched with continuous new development across the entire GTA, we predict investing in the Toronto condo market to be a smart move with lasting value.”

Copyright © 2016 Key Media Pty Ltd

New tax rule could bite cottagers

GARRY MARR
The Vancouver Sun

Foreign speculators may have been the target of a new rule from Ottawa cracking down on the tax-free capital gains exemption on the sale of a homeowner’s principal residence, but house flippers and cottage owners may also end up feeling its bite.

The new rule, which is already in effect, says you must now report the sale of a principal residence on your tax return.

Previously, while homeowners were obligated to report sales of secondary residences subject to capital gains tax, reporting the sale of a principal residence was not mandatory. That made it more difficult for the Canada Revenue Agency to track the frequency with which people were turning over their primary residences — there are limits to what is allowed — and created some confusion for owners of secondary properties, such as cottages.

For Canadians dabbling in the real estate market, the CRA’s newfound ability to track transactions could mean trouble, according to Toronto developer Brad Lamb, who thinks a crackdown on tax-free flipping was long overdue.

“Why do we keep track of every cent you make in this country on your tax filing, but not selling your house,” the developer said. “That will prevent locals (from abusing the system). That’s a good idea. Those people who buy a house, renovate it for nine months and sell it, that’s not your residence. That’s called a business and those people should be taxed accordingly. The mom and pop small-time builders have made a living at this.”

While Lamb thinks the changes will lead to more scrutiny on house flippers, he is skeptical that it will have any implications for foreign buyers. “It’s a nothing tax. It’s stupid. Why they even bothered to do it, is mind boggling,” he said.

Another group of Canadians who might increasingly find themselves navigating a more complicated question when it comes to principal residence exemption are cottage owners, or people with secondary properties for personal use. You can only claim the principal residence on one property, but vacation properties have often been ignored in reporting.

“I don’t know that it is always fully disclosed,” says Heather Scott, a sale representative with Re/Max Hallmark Realty Ltd. who is active in the Muskoka region north of Toronto. “You talk to two different accountants and get two different answers (about whether it has to be disclosed).”

Jamie Golombek, managing director of estate and tax planning with Canadian Imperial Bank of Commerce, says that legally you always had to disclose any disposition of property, but there was an administrative policy by that Canada Revenue Agency that you didn’t have to report a gain if it was your principal residence.

“There was a form for this (for recording principal residence sales) and they said, ‘Just keep it,’” said Golombek, about the CRA policy.

Gains on a cottage or secondary property are considered taxable at the 50 per cent capital gains rate unless you deem it your principal residence, something that would leave you with a tax liability on your main home. The rub is that, if you sold a secondary property and reported nothing on your return, the CRA deemed you to have sold your principal residence and used up the exemption — meaning you could have faced a major tax bill on your primary home, which had probably increased far more in value.

“I think people have been double claiming or claiming (the exemption) inappropriately because no one is tracking it,” Golombek said. “There is no real designation (of principal residence) until you sell. The minute you sell, you make a choice: Am I going to report it or not? If you don’t, the CRA deemed you to have made a principal residence exemption, which means when you sell the other property that you hold concurrently, you cannot use the exemption on the second one.”

While that hasn’t changed, the new wrinkle is that if you sold your cottage first and did not report the sale or capital gain, the CRA can now go back and reassess you indefinitely. If you do nothing, which previously meant you were automatically claiming the exemption, the CRA can now say you’ve squandered that exemption and can potentially fine you. (There is an opportunity to refile your returns, saying you made a mistake.)

Golombek says that, in general, the CRA is going to have a rich data base at its fingertips for all of our real estate transactions. “Once they have it, it’s pretty straightforward. If you are constantly selling every year and you are reporting gains, it will be pretty easy,” he says. “Right now, no one is reporting these gains.”

Tony Spagnuolo, a Vancouver-based real estate lawyer, says the CRA is going to need to hire a lot of auditors to catch everybody not reporting. “There are lots of people that will build a house, live in it for a couple of months, claim it’s their principal residence and then sell it. They never get caught.”

© 2016 National Post

REALTORS must keep on top of the latest trends

Natalka Falcomer
REM

Q: What’s the biggest fear most professionals have?

A: Getting sued by a client. We all fear lawsuits because of what a lawsuit implies: Poor customer service; lack of knowledge; and overall failure to do what’s right and ethical.

Q: What’s a growing trend?

A: Clients suing.

Agents are faced with managing numerous details, multiple parties and valuable assets. These hurdles become grueling mountains to climb when you throw in rushed time lines, emotions and fear of losing the deal. It’s no wonder mistakes happen and clients sue.  Having said that, lawsuits are not inevitable if you know the most likely reasons you’ll get sued and how to keep yourself from making fatal mistakes.

Here are the top three reasons why you’ll get sued.

1. Failure to disclose property defects

Yes, we all want to get a deal done quickly, as well as make sure our clients are happy with the price and expediency. But, a great price and a quick close won’t necessarily bar you from facing angry clients. Especially if you forget to fully disclosure all latent defects.

The numbers don’t lie: you’ll be the first to get served with legal papers after a deal closes if your client or the other party discovers defects. Defects range from improvements without permits to noises, stigmatized properties or nuisances.

“But, I didn’t know, so I’m not responsible!”, you’ll claim. Sorry, that’s not a defence. The threshold to prove that you were negligent isn’t that you did know, but that you should have known. After all, aren’t you supposed to be a real estate professional?

2. Breach of duty and negligence

If you’re an agent who “dabbles” in different asset classes or locations, be warned. You might be breaching your duty to your client and exposing yourself to claims of negligence.

Here’s why: your client places a high level of trust in you. They believe that you have the expertise you claim and “suggest” by taking on the deal. And if you don’t and if you make a negligent mistake –- even if your intentions were good — then be prepared for a fight in the courtroom. The problem with negligence claims is that it’s difficult to determine if you’ve acted reasonably. This means that, even if you weren’t negligent, you’ll still face a lawsuit and be left with a soiled reputation.

3. Giving quasi-legal advice

Every deal requires legal advice, especially since we’re moving away from non-binding offers to binding leases masquerading as offers. Not to mention, our increasingly litigious society calling for an extra “layer” of protection by way of a legal review.

Despite the real risk facing agents – and the fact that agents are signing up their clients to binding agreements without proper advice – agents don’t want to get lawyers involved. They fear that lawyers will kill the deal and slow the process.  So, the agents offer some general advice and don’t encourage their clients to get a quick legal review. After all, you’ve been doing this for years and you know more than lawyers.

Such an approach is not only problematic for the agent’s reputation, but also his commission. I’ve witnessed many deals dying because buyers, sellers, landlords and prospective tenants use the “we didn’t get legal advice” excuse to get out of deals. And some unscrupulous clients then point the finger at the agent, claiming that they never advised them to get the advice they need.

What can you do to protect yourself?

The most common cause of lawsuits is assuming you know everything and subtly putting your interests ahead of others.

There are three simple panaceas to this litigation cause:

• You can’t learn what you already know: Remain humble. Neither you nor I know it all. The most dangerous people are those who think what they learned in the past holds true today. It simply doesn’t: laws change, clients change, communication standards change and the product changes.
• Don’t stop learning: Agents must constantly educate themselves if they want to call themselves experts. Their knowledge should not only be about local rates and sale prices, but also the potential issues that may arise, such as structural and potential legal threats. Various bodies such as your real estate board, the Real Estate Institute of Canada and Institute of Real Estate Management, the Urban Land Institute (ULI) and the Society of Industrial and Office Realtors (SIOR), offer excellent programs and designations to stay on top of all of the changes in your industry.
• Get a professional involved early: always recommend that professionals get involved early, before anything is “firm” and make this recommendation in writing. Getting the professionals involved early will ensure that you avoid wasting your time negotiating certain points that simple won’t work from a legal, financial or logistical perspective. My experience shows that advice on sticky issues early in the process always helps to close the deal faster because everyone is working in tandem and major headaches are anticipated and prevented.

These solutions are so simple, yet rarely followed. If you don’t take a moment to protect everyone’s interests -– including yours –- then you’ll likely face a disgruntled client and a lawsuit. After all, it’s always better to have no deal, than a lawsuit and no deal.

© 2016 REM Real Estate Magazine

Toronto real estate development is back logged with red tape

Steve Randall
Mortgage Broker News

While the debate continues on whether Ontario should follow BC with a tax on foreign ownership of homes in the GTA, a report highlights another issue which is driving up home prices.

With land supply already restricting the options for builders and its scarcity increasing the cost of lots, the Fraser Institute says that red tape is costing builders disproportionately more in Toronto than in other cities such as Hamilton, adding to the cost of homes.

The study found that builders pay typical compliance costs of $20,961 per unit in Hamilton while in Toronto the cost is more than double at $46,569. In the Oakville builders spend more than $60k on compliance.

“Costly and confusing regulations, long approval times, rezoning delays, and overall uncertainty for developers both increases the costs and impedes new homes from being built throughout the Golden Horseshoe,” said Kenneth Green, a senior research director at the Fraser Institute and co-author of the study.

Waiting for rezoning is a drawn-out process in Toronto, the study found, with an average of 7 months taken to complete; the average for the region is 4 months.

“If city councils in the Golden Horseshoe really want to increase the supply of housing and lower prices, they should consider more sound regulatory regimes that encourage, not stifle, residential development,” Green said.

Copyright © 2016 Key Media Pty Ltd

The drop in Vancouver home sales part of trend that started before new tax

Steve Randall
Mortgage Broker News

 

The Vancouver housing market has eased since the introduction of a tax on foreign buyers but the decline continued trends that were already present.

“Foreign buyer activity is one of many factors impacting the Vancouver housing market,” noted Robyn Adamache, CMHC’s Principal Market Analyst for Vancouver.

Other factors noted by the Canada Mortgage and Housing Corp. include supply constraints for both housing and land; together with economic and demographic fundamentals driving demand.

“Sales and prices had already started to dip before the introduction of the Foreign Buyers Tax, so it basically underlined existing trends in the resale market,” added Adamache.

CMHC says that prior to the tax’s introduction there was already a slowing pace of sales, reduction in average prices, and a shift towards greater condo sales.

Copyright © 2016 Key Media Pty Ltd

Plenty of variety on offer at Skyridge in Squamish

SHAWN CONNER
The Vancouver Sun

Project name: Skyridge

Project size: a 20-acre site comprising condos, townhouses, duplexes and 30 single-family lots

Residence size: 680 — 2,300 square feet

Price: $659,000 — $859,000

Developer: Diamond Head Development

Architectural design: Murdoch & Company Architecture and Planning

Interior design: Tracey Ford/Ford Design

Website: skyridgesquamish.com

Sales centre: 5 — 40437 Tantalus Road, Squamish

Contact: Jennifer Sale, Sutton West Coast Realty

Phone: 604-723-3525

Hours: 2 p.m. — 5 p.m. Saturdays, or by appointment

Construction: due to begin November 2016; phase I completion fall 2017; phase II early 2018; final phases the end of 2018/early 2019

Prospective homeowners wanting a piece of Squamish — or at least a part of the Squamish sky — need look no further than Skyridge.

When complete, the 20-acre site will encompass townhomes, duplexes and one-, two- and three-bedroom condos. In addition, two subdivisions of 15 lots have been set aside for single-family houses.

No matter what kind of home, though, residents will experience the beauty of the supernatural part of the province.

“Skyridge is perched on a mountain,” said Jason Wood, Diamond Head Development’s founder and general manager.

“It literally has 360-degree views. You stand up on that, you turn around and pretty much see in any direction. We have gorgeous views of the [Stawamus] Chief and the Tantalus range. Our site is bordered to the north by a creek. With a creek always comes an environmental area, so we have a buffer of green space in perpetuity to the north of our project.”

So far, the developer has sold out the first subdivision and is selling lots on the second. Phase I and II, which include 20 townhomes (of approximately 2,100 square feet) and 12 duplexes (2,300 square feet) have also gone on sale. (The final phase, phase IV, includes the final eight duplexes and six townhomes.) The third phase planned is a condominium building with 44 “skysuites,” so called because of their location on the site’s highest elevation, Wood said.

“When you’re standing on the rooftop decks that we’re providing, you will have a 360-degree view. You’re literally up in the sky.” The skysuites will be one-, two- and three-bedroom units that range from 680 to 1,500 square feet.

“Basically, you’re up, you have this 180 – it’s 360 because with the skysuites it will be 360 — you get this huge open ceiling that you just can’t get in other neighbourhoods that are boxed in,” said sales manager Jennifer Sale. 

The elevation from the bottom of the Dowad Drive/Tantalus Road intersection to the site’s top road is 200 feet.

“How do we get such great views? This is why. You don’t really notice it when you’re driving up. We’re out of the flood plain, which is a big deal in Squamish. You can have living space on lower levels. I think the development is going to mark a new benchmark for quality in Squamish.”

The variety of product is part of the appeal, Sale said.

“You can get someone living in a one-bedroom in the same neighbourhood as someone who’s built a million-dollar home,” she said. “It’s a real mixed demographic. We’re going from first-time buyer to empty nesters.”

The site will have green space with new trails connecting to established mountain and walking trails. And the developer has come to an agreement with the Squamish Montessori school to build an independent school on the site, with 50 daycare and 100 to 150 elementary spots.

“A lot of the schools are outgrowing their space, and independent schools that are renting out their space don’t have anywhere to go,” Sale said. “So he (Wood) basically has created that for them.”

Exteriors of the builder’s homes will be West Coast modern in design. For lot-buyers, Diamond Head has drawn up a set of design guidelines to ensure “that whatever somebody builds looks appropriate with the rest of the product we’re building,” Wood said.

Features include overheight ceilings and wide-plank, oak-engineered hardwood flooring, expansive decks and patios, open-plan kitchens, a choice of two colour palettes and two upgrade packages.

Interior design comes courtesy of Georgie Award-winning Tracey Ford, of Ford Design. As well, the homes will follow Built Green specifications, including Energy Star windows and sliding doors, LED designer lighting and solar-ready design.

“It’s such a rare site and offering,” Sale said. “There’s no better option in Squamish. For the location, the views, the value. Our prices are great, and the quality of construction and finishings. It’s a rare elevated 20-acre site within minutes of all amenities. And it’s right next to the trails and green space. You can walk to Alice Lake in 20 minutes. It’s got everything anyone can ask for in a new product.”

A lot of the early interest in the homes has come from within Squamish itself, says Sale.

“I think people within Squamish recognize what a unique site it is, so they’ve been the early ones to act.”

Recently, Vancouverites have been getting on board too. “It doesn’t take them too long to figure it out as well. They do need to compare and figure out the lay of the land, so to speak, and what else is available in Squamish. And they’re coming back after they’ve done their research and starting to make offers now.”

It didn’t take much research for Lara Spence and her husband Jeff to decide to put a down payment on a duplex.

“We wanted to get in early because we knew the prices would probably keep going up,” Lara said. “The shape of the land, where it is, the views are going to be quite good for the duplexes. For the townhouses as well. So we wanted to get in because we knew if the prices went up, as applied to the views getting better going further up the hill, it would be better to get in early.”

The Spences’ plan is to move from their house in Vancouver’s Fraserview neighbourhood to their Squamish duplex when Jeff, a schoolteacher, retires. At first, Lara suggested North Vancouver as a retirement location, to be close to the mountain bike trails there.

“But he said, ‘I can’t go mountain biking on the North Shore when I’m 65. I’ll kill myself!’ So we said, ‘Let’s look at Squamish.’ It’s a beautiful community, it’s the outdoor capital of Canada, the mountain-biking and hiking there is amazing, and we have a bunch of friends who have moved there or are thinking of moving there. So we thought about Squamish.

“And then, Skyridge, because of the view aspect, and it’s brand new — I’ll never have the new house experience in Vancouver, for the price.”

© 2016 Postmedia Network Inc.

Latest project is Mosaic?s fifth in four years in neighbourhood

SIMON BRIAULT
The Vancouver Sun

Edward

Project location: King Edward Avenue and Yukon Street                

Project size: 51 apartments of between 588 and 1,744 square feet; one to three bedrooms

Developer: Mosaic Homes

Architect: Shift Architecture

Interior designer: Cristina Oberti Interior Design

Price: from the high $700,000s

Sales centre: 5710 Cambie Street

Hours: noon — 6 p.m., daily

Telephone: 604-325-2216

Website: http://www.mosaichomes.com/edward

Occupancy: Spring 2018

Over the past few years, there’s been considerable development activity in the Vancouver’s Cambie neighbourhood, and one of the most prominent players has been Mosaic Homes, the developer behind two upcoming four-storey apartment buildings on King Edward Avenue just east of Cambie.

The project, aptly named Edward, will include a total of 51 homes that will go on sale toward the end of the month.

“This is the fifth project we’ve developed in the Cambie neighbourhood over the last four years,” said Geoff Duyker, Mosaic’s senior vice-president of marketing. “We love the area and we’re excited to be building Edward, which will likely be our last property here for a little while.”

“It’s absolutely our favourite development so far,” he added. “It’s received the most interest from people in the Mosaic office we’ve ever had. What really makes it stand out is the fact that it’s got such broad appeal. That’s because it’s in such an incredible setting, right at the nexus of the Canada Line, Cambie Village and the park.”

A glance at the website of the Cambie Village Business Association confirms Duyker’s assertion that the location doesn’t want for vibrancy. There are fully 19 categories under the shops and services section, never mind the number of individual businesses. Milestones Grill and Bar, Bier Craft Bistro, The Park Theatre, Yuk Yuks International Stand Up Comedy, Steve Nash Fitness, Lululemon Lab, Whole Foods, Choices Markets, Shoppers Drug Mart, Subway, Starbucks and Sushi 7 – it’s all there, along with much more besides.

“The village is just a few blocks away and it’s such an incredible high-street amenity,” said Duyker. “There’s great restaurants, little boutique shops, bigger chain stores, coffee shops and services. When you put all those things together, you get a phenomenal location that is proving very attractive to all kinds of buyers.”

Hillcrest Park, which includes a huge community centre with swimming pools, an ice rink and a gym, is within walking distance of Edward. The park also has Nat Bailey Stadium, where the Vancouver Canadians play baseball.

The nearby Queen Elizabeth Park is home to the Bloedel Conservatory, a pitch and putt golf course and fine dining at Seasons in the Park. The park spans some 130 acres and is known as Vancouver’s horticultural jewel – a major draw for flower enthusiasts and view-seekers, and a popular backdrop for wedding photos. Its summit is 152 metres above sea level, the highest point in Vancouver and provides stunning views of the park, the city and the mountains on the North Shore.

Mosaic has been touting these undeniably impressive amenities for a while now, as Duyker explains.

“Edward is preceded by more than 300 new homes that we’ve designed and built in the neighbourhood over the past four years,” he said. “We’ve been able to take everything that we’ve learned from our customers in that time and pour it into the design of this project. All the homes will have 10-foot ceilings, which will provide more volume, more storage space and more light. In general, we’ve made the homes larger too. We have more two- and three-bedroom homes in this project than we’ve ever had before. Buyers have told us they want bigger homes that provide space for both downsizers and young professionals looking to move up.”

The buildings at Edward will have white brick facings with black windows and black metal detailing. Duyker said that the buildings will stand the test of time and that the designers are aiming for a classic look with industrial materials, but in a contemporary form. The development will include a landscaped courtyard with garden plots for herbs and vegetables and an outdoor leisure area with spaces to sit, play and gather.

The homes range from 588 to 1,744 square feet and have one to three bedrooms. There’s laminate wood flooring throughout living and dining areas and textured loop pile carpeting in the bedrooms. Kitchens have Shaker-style cabinetry and stainless steel Bertazzoni ranges, which can be upgraded to various colours. There are peninsula countertops or kitchen islands in all homes, lots of countertop space, large matte black pulls on pull-out draws and, in some homes, full-height pantries.

Bathrooms feature polished white quartz countertops and white under-mounted porcelain sinks. There are Grohe faucets in polished chrome and frameless glass showers in the ensuites. Some homes have semi free-standing, deep soaker tubs in the second bathrooms. All bathrooms come with water-efficient Kohler dual-flush toilets and contemporary porcelain wall and floor tiles with rich marble finishes.

© 2016 Postmedia Network Inc

When will affordability be reached, and who decides on the sweet spot?

PETE MCMARTIN
The Vancouver Sun

A couple of weeks ago, I wrote about the revenue windfall the provincial government was enjoying from the property transfer tax. Revenue from the tax had come in at $2.2 billion, a billion dollars over projections. It had become, I wrote, the government’s largest single generator of revenue, surpassing gambling and resources.

Wrong, said an email from the Ministry of Finance I received the next morning: Revenue from personal and corporate income taxes exceeded property transfer tax revenue. 

I stand corrected. 

In reply to that email, though, I asked if the government had modelled the effect a 15 per cent tax could have on the housing market. Given that the government had been unwilling to tamper with the housing market until this summer, the tax to me, at least, appeared to have been decided upon at speed and out of political expediency. Had the government picked the 15 per cent figure out of the air without really knowing what effect it could have?

Any information about modelling was privy to cabinet confidentiality, came the ministry’s reply. But included in the email was a study the ministry had done in mid-2015. Its conclusions: If foreign buyers made up five per cent of the market, and if prices fell by 10 per cent due to the tax, roughly “$60 billion in home equity would be lost, averaging about $85,000 per homeowner in the Greater Vancouver area.”

It also cited Singapore’s experience with a 15 per cent tax, which, the ministry admitted in its email, had served “in part” as the government’s model.

“In terms of affordability,” the 2015 study stated, “Singapore is not a success story. Singapore has managed to halt a rapid increase in house prices. However, an individual unable to afford a home in 2009 remains unable to afford a home in 2015. The growth of house prices in Singapore over that period outpaced the growth in incomes.”

That was a year ago. The market changed in that time, and so did the public’s impatience with the government’s unwillingness to act. I asked if there was a more recent projection. In reply, I was sent an updated ministry forecast released in September. Its conclusions: 

Property transfer tax revenue will fall $500 million for 2017/18, and another $100 million for 2018/19.

The 15 per cent foreign buyers tax will bring in $255 million for 2017/18, and the same in 2018/19.

“As you can see,” a ministry spokesman wrote, “our forecast is for government revenue from property transfer tax to decline, a return to more typical levels of housing starts, and a total number of unit sales of about 40,000 per year in 2017 and 2018, with a reduced rate of foreign buyers in the market compared to the information we have between June 10 and Aug. 31.”

It’s conjecture, of course. The future in this case is not only uncertain, it is literally, to homeowners who may watch their equity erode, a gamble. Unquestionably, there is overwhelming public support for more affordability, even from homeowners who believe that while a decrease in house prices may not be good for them personally, it must be done for the public good. (And has there ever been a more generous surrender of personal assets toward that public good? A public that railed against a measly transportation tax that would cost them pennies a day have clamoured for a tax with the expressed intention of costing them tens, if not hundreds, of thousands of dollars in their home equity.)  

However, that support for the tax is predicated upon finding a sweet spot — one which has yet to be identified — between being too little a decrease, which would do nothing to affect affordability, as Singapore has shown, and too much of a decrease, which would alarm the 70 per cent of households in Metro Vancouver who are homeowners, not renters. How much of a drop in house prices is enough? Ten per cent? Twenty? Thirty? When will affordability be reached, and for whom?

On Thursday, Jock Finlayson, senior economist for the B.C. Business Council, mused on that subject on Shaw TV’s Voice of B.C., hosted by Sun columnist Vaughn Palmer. Finlayson supports the tax and considered the increase in house prices over the last two years “destabilizing.” But he had a caveat.

“A modest adjustment in the market I’m sure will be welcomed by the government. A big drop in prices, however, might be something else. A 20 per cent decline in home prices across Metro Vancouver would reduce the wealth of homeowners in the region by $100 billion.”

Would that reduction be permanent? Maybe not. Helmut Pastrick, senior economist with Credit Union 1, told me he believes that after an initial correction lasting six months to a year, prices will rise back to their original levels. Finlayson thinks prices are likely to move higher in the long-term, too — though he believes those prices would be even higher without the 15 per cent tax in place.

Or as I read it, house prices would no longer be obscenely, stratospherically unaffordable to the average wage earner, just, you know, business-as-usual unaffordable. 

© 2016 Postmedia Network Inc.