Problems in Paradise
The city of Vancouver is a special place. Situated between the Strait of Georgia and the North Shore Mountains, it has what many would call an ideal climate. The hottest month of the year is August, with an average temperature of 64 degrees F; the coldest month is January, with an average temperature of 38 degrees F.
“I like the weather here better than anywhere else I’ve lived in the states,” says Glen Spinelli, president and COO of Fireplace Products International (Regency). “I’ve lived in Connecticut and Maryland – I’m really a New Englander – but the weather here (Vancouver) is brilliant. It’s not real cold. It doesn’t get real hot. There’s no humidity and there are no bugs.
“I spend 90 percent of my free time outside, walking around, hiking through the city. There is so much to do here.”
Spinelli isn’t alone. Vancouver has become a magnet for many of the wealthiest folks in the world. You see, it’s not just a wonderful place to walk around and enjoy the weather, as some do, it’s also a safe place to park a pile of money by investing in local real estate.
The trouble is that the demand for that real estate is such that prices have been driven sky high. In fact, 90 percent of the area’s detached homes are now valued above C$1million, and many are left unoccupied.
How many? Vancouver mayor Gregor Robertson estimates that more than 10,000 are empty, and an additional 10,000 are “under-utilized.” That, while the availability of rental properties is basically at zero.
In an effort to slow the rapid pace of real estate appreciation, the British Columbia government, on August 2 of this year, imposed a 15 percent tax on foreign homebuyers in the Metro Vancouver area. That’s right, the tax is C$150,000 on the purchase of a C$1million home, or C$450,000 on a C$3million home.
In addition, in mid-September the city of Vancouver announced a levy on investors who sit on vacant properties. The new tax may be as high as two percent of the property’s assessed value, which would be C$20,000. It will only apply to homes that are empty year ’round and not primary residences – that is, “secondary properties that are business holdings,” said Mayor Robertson. “Vancouver is in a rental housing crisis,” he said.
On Vancouver Island, the Victoria City Council also has indicated it wants to tax vacant homes, but has not yet tabled a proposal. Two thousand miles away, the city of Toronto is carefully watching how Vancouver fares with its 15 percent tax on foreign investors.
When Spinelli says, “I love it here,” he joins a very large club.