Canada’s two most expensive housing markets, Vancouver and Toronto, have instigated chatter among analysts, government officials and would-be homebuyers, with each group scratching their heads over how to reign in runaway price tags.
One commonly held focus is speculation. Various estimates settle around there being 65.000 vacant dwellings existed in Toronto last year, while the provincial government of Ontario followed British Columbia’s lead in early 2017, by levying a tax against vacant property owners.
Speculation is believed to be a major factor driving up prices. Where people buy for the sole purpose of flipping, there is never intent of reselling at the same price. Thus, a dwelling is purchased and resold at a higher price. Other sellers follow the lead of the market and increase the sale price of their own homes. And, if a home is bought and not quickly flipped, it simply sits empty, lowering the amount of supply in relation to the amount of demand.
Though they don’t contradict the impact of speculation, StatsCan recently offered their take in a discussion with the Financial Post. “Sometimes, people believe that they can use the census counts to get a picture of unoccupied dwellings by subtracting total private dwellings from private dwellings occupied by usual residents.” The issue here is that the equation does not account for groups like students away for the summer or units used as Airbnb stops.
But even if the math is questionable, there is a problem. At least that’s what Andy Yan, a planner and director for the city program in Vancouver, told the Financial Post. He believes that speculation contributed to the issue in Vancouver and has spread to Toronto. “Welcome to what Vancouver has been saying for the last 10 years,” said Yan. “The privilege of owning a home in Vancouver seems to include not living in it.”
In search of a better method for tracking vacancy rates, various parties have posed commissioning surveys or questioning homebuyers about their intent. Of course, the issue of non-responses and perfidy render the method flawed.
“I think it is happening,” said Pamela Alexander, chief executive of Re/Max Ontario-Atlantic Canada, “but the question is to what extent?” Then the question is what are the unintended consequences of something like a vacancy tax?”
Clearly illustrated by the discussion is that there are more questions than answers. The degree to which speculation is inflating the markets, and the degree to which addressing speculation will temper prices, remain unresolved issues for both cities.