The hot pandemic housing market is finally being labeled as one of the first industries to see exponential hyper inflation with a projected 9 per cent price increase in 2021. As we head into our second summer of health orders, restrictions, and printed stimulus money, the Feds underreporting of inflation in hard assets like housing has now manifested with unaffordable results.
Speculation about the housing market as a bubble about to burst may have been premature, as the USA is now poised to extend mortgage forbearance until Dec. 31, 2021 with a 120-day grace foreclosure clause.
Buyers are now priced out of the areas they work and need to live in, rental units are few and far between, and the future of affordable housing for low income families and pensioners is a critical issue that must now be dissected and discussed with a real hard look and honest approach. The sizes of urban city serviced lots is now on par with Holland, and they are one of the most crowded countries on the planet. To compare, land and lot purchases for new home builds 30 years ago was 10-20 per cent of total build costs, today you need to budget 50 to 60 per cent of the build costs to land!
Immediate changes to long-standing capital gains tax policies is simply exploiting the booming housing market to get hands on taxpayers hard earned home equity. A government tax grab, after printing billions in stimulus dollars, is not a solution to the housing and affordability crisis nor is it a solution to pay back the grossly mismanaged Canadian federal debt.
We need real, impactful policy that deals with the overwhelmingly apparent market catalyst fuelling this sky-high market. The provincial government has at its disposal very easy way to resolve the real underlying cause of unaffordable housing, which is “a lack of supply.” Historically, real estate markets are cyclical and will correct themselves, and a market correction is inevitable in our future, but there is a widening gap of supply. The acute issue is lack of supply of private saleable land and homes. Regulating the market further without addressing the supply issue will do nothing to stop price growth in the long term.
How do we know for sure that it’s a lack of supply that is the driving this freight train of a market? It’s simple math: we have double the population competing to own the same amount of saleable private land. In 1980 BC had a population of 2,500,000 and now 40 years later, we are fast approaching a total population of 5,000,000. We have 2.5 million more people competing to live on the same amount of privately owned land in BC in just 40 years, and with more population growth from the planned future immigration increase, an affordable balanced market will most likely never happen.
Why are governing policy makers blind to the real issue or rejecting supply-side fixes in their regulation considerations? One can only assume that our policy makers are putting progressive future left-wing agendas to prioritize environmentalism over affordable housing and home ownership needs. Toronto Dominion Banks CEO, Barhat Masrani, recently stated his opinions and recommendations, and he has been calling for longer-term measures to increase the supply of housing for many years. On that front, “instead of improving we are getting worse,” he said.
There is one viable and quickly implementable solution that would make an immediate market correction in B.C. without putting further regulations on the real estate industry, home buyers or burden tax payers. That solution is to release a small percentage of Crown land holdings into the private sector to balance out the provinces supply of saleable land. At this time 94 per cent of the land in B.C. is Provincial Crown Land, of which 2 per cent of that is covered in fresh water. Federal Crown Land makes up a further 1 per cent of the province which includes First Nations lands, defense lands and federal harbors. The other 5 per cent is privately owned! That’s right, the privately owned land holdings in this province make up only 5 per cent of the entire land mass.
In Alberta, Crown land is called “publicly owned land,” 60 per cent of which is provincial public land and 28.5 per cent is privately owned, and federal public land covers the remaining 10 per cent of the province. Looking further east, 90 per cent of land in Manitoba is Crown land with the remaining 10 per cent being private. As a whole less than 11 per cent of Canada’s land is in private hands; 41 per cent is federal crown land and 48 per cent is provincial crown land.
hey have publicly stated the land should benefit all British Columbians, and right now the affordability of housing is becoming a serious issue to residents ability to remain above the poverty level.
If the provincial government released another 2 to 3 per cent of Provincial Crown land into the private saleable holdings, we would see an immediate and lasting impact on the real estate market as supply would increase dramatically and prices would stop their continued rise. The uplifting economic benefits of homeownership could continue to grow the economy and the province and its residents would actually benefit as a result instead of being continually penalized for a population growth issue that has been neglected by governing bodies in BC.
The released Crown parcels could be ear-marked for specific types of qualifying multi-unit and single family affordable housing which could actually be affordable! In setting prices for Crown land, the province has a responsibility to not distort private land markets, but, the private land market is in need of a correction. Should only the Sovereign Crown, government, bank/mortgage lenders and the already wealthy prosper and benefit from the land in this province and not all tax paying citizens?
To conclude, the land base that is designated Crown should not be more valuable an asset than the well being, health and economic growth of its citizens and communities. This very viable option needs to be a serious discussion had by policy makers in their next zoom meeting. It’s time to try a different approach to solving the housing affordability crisis in this province. Crown land policy dictates the land is to be used to ensure the well being of it citizens, and it’s time the government put tax payers and citizens needs first.
Freddy Marks, together with his daughter Linda Marks, runs Agassiz’s 3A Group Sutton Showcase Realty. He has been a Realtor in Canada and Germany for more than 30 years, and currently lives in Harrison Hot Springs.