Over the years, the issue of housing has been a contentious issue in the city of Vancouver. Notably, the Vancouver City Planning Commission was developed in the 1920s to develop a plan of developing and growing the city of Vancouver and has addressed several urban issues like housing and public realm in the city (Punter 37). In recent years, the housing sector in Vancouver has witnessed several changes in a bid to seek improvements. The ever-increasing housing costs in the city are an indication that the government has not done enough to protect its citizens from exploitation. Although I agree with some changes like empty housing tax, still many newly adopted policies need to be reassessed as they are unfavorable to the residents of Vancouver.
Introduction of Vancouver’s Housing History and Development
The current situation is different from what was happening about four decades ago as the city had fair housing prices. The average price of a home in 1977 was around $90,000, and by 2017, the benchmark price for most housing properties was approximately $1,050,300 (Rherrad, Mokengoy and Fotue 5). Although the past 40 years have been characterized by price fluctuations of housing in the city, the period between 2008 and 2009 witnessed a nose-diving in prices due to the worldwide economic crisis (Rherrad, Mokengoy and Fotue 5). In this sense, Vancouver has witnessed a sharp increase in housing prices compared to what was there in the past years.
One of the major causes of increased housing prices in Vancouver is high-interest rates. According to Greig (75), the interest rates in Vancouver are rising that a higher rate than the income of most residents. Notably, in recent years, the interest rates have gone up by about three times compared to the early 2000s.
Foreign investment has had a significant impact on the housing market in Vancouver. About one in every 20 residential property owners in Vancouver are non-resident. Notably, the high number of foreigners and immigrants has led to increased demand for housing, which has, in turn, resulted in surging prices in Vancouver’s housing market. Although some immigrants are poor and prefer living in less attractive neighborhoods, most of them who settled in Vancouver are wealthy and have no problem with high housing prices. In this sense, the arrival and settlement of immigrants in Vancouver have been a major contributor to the rising housing prices in the city.
In my opinion, both housing prices and interests are only going to rise further. The recent increase in interest rates by the Bank of Canada was an indication that it is unlikely that the city will witness a decrease in rates in the near future. More so, the government’s plan to increase immigration by 13% by 2020 is a proof that the number of immigrants in Vancouver is likely to increase (Greig 79). In this regard, demand for houses will be high, and subsequently, the prices of housing will be on the rise. Based on these expectations, it is without a doubt that both the Federal and provincial governments have failed in protecting the residents of Vancouver from high housing and interest rates. Although immigrants are necessary for Vancouver, their presence should not be a source of suffering among Canadians living in the city due to the lack of adequate housing. Subsequently, the government must have plans on how to balance the increasing number of immigrants and the ever-rising housing costs and interest rates. Therefore, the Federal government should develop specific measures to ensure the residents of Vancouver, especially low-income earners, are not overexploited.
Effects of Vancouver’s Housing Prices
Over the years, the surging housing prices in Vancouver have significantly affected the city’s residents. One of the significant impacts has been increased household debts and burdens among most families. Most people have resulted in borrowing loans due to the increased mortgage rates in the city. According to Parizeau (1925), Vancouver residents would need nearly 88 percent of their household income for them to afford to buy a house. More so, the prices have denied a significant percentage of families the opportunities to own homes due to the inability to afford the homes. Additionally, most of the disposable income among Vancouver residents end up in catering for liabilities like mortgages and other types of loans. Therefore, Vancouver’s high housing prices have been a significant cause of increased burden and debts among families.
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The ever-increasing housing prices in Vancouver have been a blow to the young people residing or planning to move to the city. Most of them have had challenges renting or owning homes in Vancouver due to financial constraints. Notably, most of the young people are still paying their students loans and therefore are unable to afford rents and mortgage rents in cities like Vancouver. This situation not only lowers their confidence but also leads to increased health risks like stress, anxiety, and depression among the youth. Notably, this trend has seen most young people move from Vancouver to less expensive cities like Ottawa, thus, causing a high rate of brain drain in Vancouver. Thus, the high housing prices in Vancouver have negatively affected the confidence of young people resulting in them moving to other Canadian towns.
The effects of high housing prices in Vancouver are not only felt by individuals but also by companies and organizations. The biggest concern for most companies is creating an environment in which employees can move back and forth between home and work as well as the housing stock. Notably, the high prices have affected the companies’ recruitment as most professionals and workers are not willing to settle in Vancouver due to unaffordable housing prices. According to Moos, Revington, and Wilkin (447), the Vancouver Police Department has found it difficult to attract officers due to the high housing costs. More so, young people who are the most suitable candidates for most jobs are reluctant to work in Vancouver’s companies due to the inability to afford rents, and their savings are not enough to enable them to buy a home in the city (Moos, Revington and Wilkin 446). In this regard, companies located in Vancouver have endured difficulties in recruitment due to high housing costs which are unfavorable for most workers.
The high costs of housing in Vancouver have had tremendous impacts on individuals and organizations. In my opinion, the Federal Government should ensure that residents of Vancouver are not suffering due to debts and loans. One of the best approaches is to introduce special mortgage and interest rates for low-income earners and young people. This solution will enable them to own homes in Vancouver, avoid accumulation of debts and loans, as well as prevent the high rate of brain drain among the youth residing in the city. Additionally, companies can establish several ways to ensure their recruitments are not significantly affected by high housing prices. The best way is to offer transport services to workers who reside outside Vancouver. More so, the companies should strive to guarantee they have favorable wage structures which will attract more workers irrespective of the high housing costs. Furthermore, the government should seek to provide tax incentives to companies located in areas that have high housing costs, which, in turn, will result in them giving more benefits to their employees. Therefore, the Federal Government and companies must ensure that the high housing costs are not a barrier to the growth of citizens and employees respectively.
The Solution of the Government
The empty housing tax was one of the initiatives established to ease the problem of housing in Vancouver. The primary purpose of this tax is to ensure people return empty and under-utilized properties for them to be used as long-term rental homes for individuals residing and working in the U.S. (Kershaw 54). The aim of establishing the empty housing tax was to relieve pressure on Vancouver’s rental market as the city has been experienced a severe housing crisis for several years. Notably, Vancouver has been characterized by one of the lowest rental vacancy rates as well as the highest rental costs in Canada (Kershaw 54). In this regard, the Empty Housing Tax has been an essential policy in the city of Vancouver as it has motivated people with empty and under-used homes to rent them to enhance the decrease of the housing crisis.
The number of immigrants investing in Vancouver has grown tremendously. One of the initiatives is the enactment of the Foreign-buyers tax to increase costs to foreign buyers of homes in Vancouver. Some of the objectives were to ensure that homes become affordable for residents with Canadian background and to improve the tax revenue for the provincial government (Flores 180). Notably, the tax mainly targets foreigners who play little or no income tax in Vancouver. Currently, the rate of tax for foreign buyers of homes and other properties stands at 20% (Ley 27). One of the main reasons for the tax was the high number of Chinese buying homes in Canadian cities like Vancouver (Ley 27). Therefore, the regional government has made several efforts to curb the number of foreign investors who own homes and other properties in Vancouver.
Vancouver has witnessed the change of mortgage rules in recent years. Some of the recently enacted mortgage rules include more rigorous “Stress Test”, restriction of mortgage insurance to owner-occupied dwellings, and an increase in mortgage default insurance premium payable (Rherrad, Mokengoy and Fotue 5). A “Stress Test” is whereby an individual’s mortgage qualification is determined using the rates provided by the Bank of Canada rather than the initial contract rates (Rherrad, Mokengoy and Fotue 5). Generally, Vancouver has witnessed significant changes as far mortgage rules are concerned.
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In my opinion, the empty housing tax is a crucial initiative due to its role in reducing the rate of the housing shortage in Vancouver. It is essential for owners of vacant and under-utilized properties to rent them to residents who do not have their place. On the other hand, the foreign buyer’s tax is a well-thought initiative, but it must be used in a way that does not discourage foreign investors from settling in Vancouver. Therefore, the provincial government must ensure the taxes imposed on foreign buyers give the locals a competitive advantage without necessary over-exploiting the foreigners. Also, the changes in mortgage rules are essential in stabilizing the rate of house buying and selling in Vancouver. Therefore, both governments must ensure that Canadian citizens are protected and that the foreign investors are provided with a conducive working environment as it is essential for the city’s economy.
Vancouver has one of the highest housing costs in Canada. The prices of houses have surged significantly compared to what was the norm about four decades ago. Some of the effects of high housing costs are increased family burdens, adverse impact on young people’s confidence, and the lack of workers to recruit in companies, among others. In this regard, a collaboration between the Federal and Provincial governments as well as stakeholders related to housing is needed to ensure Vancouver has effective housing policies. Essentially, any adopted policy regarding housing should guarantee that the main beneficiaries are the Canadian citizens living in Vancouver.
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