– Vancouver Courier
Old people have money. Young people have time. It’s a broad statement, I know. But in general it is true. The older we get, the more we’d trade wealth for extra years. The younger we are, the more we demand both. We are so arrogant.
And this brings us to the worn stone steps of the Vancouver Art Gallery today, Sunday, where the youth of YVR are revolting. They’re angry, too. Not gonna take it.
“It’s time to be heard! There is no end in sight to the stratospheric home prices in Vancouver and its impact is being felt across our communities.
“Families and professionals are leaving in frustration, homes sit vacant while too many need shelter, rent is sky-high, businesses can’t retain talent in this city, and the next generation of Vancouverites are forever priced out. The affordability crisis is affecting everyone in the income-spectrum and problems are all interconnected. But what’s to be done?”
So, a big rally against real estate prices in a city where the average detached hovers around $1.4 million. The kids, led by Twitter warrior Eveline Xia (I spoke with here a few days ago, as you know), have turned this into a Millennial-vs-Boomer, local-against-Chinese, all-vs-politicians movement. It started with her #DontHave1Million campaign, spread to the conflict-loving MSM, spawned a tax-foreigners petition with 25,000 names and now has gripped the pliant mayor, Gregor Robertson.
Friday night, after years of silence, and as it became apparent the winds were shifting against him, he issued this statement:
“We definitely need taxation tools that discourage speculation on real estate. It’s clear that rampant speculation on real estate is driving up prices in Vancouver. Vancouver needs the BC Government to take action on creating a speculation tax and recognize that we need a fair and level playing field to make housing more affordable for residents in Vancouver, and throughout the province. Their complete absence in supporting low and middle income housing is making it extremely difficult for people, especially young people, to live and work in Vancouver.”
Next in line was the local condo king, Bob Rennie – one of those West Coast, anything-goes marketing guys as responsible as anyone for blowing on the embers of housing lust. We need a speculation tax, he told a big conflab of business people last week. “It’s speculation we should be concerned about. The conversations aren’t about foreign investment, the conversation is about China. That’s the elephant in the room.”
Rennie (and his political horse, Robertson) is calling for a sliding-scale tax linked to the length of time someone owns a property – in addition to capital gains tax, and the CRA’s treatment of quick gains as 100%-taxed income. Where should the money go? “Let’s repatriate some of that money back to first time buyers,” he said graciously, hoping everyone in the room would forget he makes his living selling boxes in the sky to horny kids.
Well, it’s clear those same kids are feeling victimized – persecuted by a system they say is broken and unfair. In 1976, they argue, the Boomers needed to save for only five years to amass a down payment. Now it’s fifteen. Average wages, they add, are pitiful. Besides, everyone has to go and get a degree or two, incurring debt. They feel the world has failed them when they cannot turn into their parents and within a short time of leaving university have a marriage, a kid, a detached urban house, a retriever and a picket fence.
And so they Tweet. They petition. They op-ed. They blog. And they march. Here is how it looked on Sunday:
Time will tell if others, like the mayor, bend and sway with the wind. With a federal election on the horizon, and the moist generation leaning left, it would not surprise. But I would obviously be a mistake. It’s always sexier and more fun to blame the system than yourself, your peers or your family.
The truth is a spec tax won’t make a SFD in Vancouver more affordable. Nor will beating up on Chinese immigrants or investors. Only by addressing the root causes of this stupid-price situation will any sanity return to the real estate marketplace.
We know what they are. I just devoted eight years to telling you. At the top of the list are the lowest interest rates ever which have encouraged excessive debt, overspending, and inflated house prices. Once rates start to normalize, the thud will be deafening. Then there’s financial illiteracy. You know, the kind that leads BC residents to spend (on average) 108% of their incomes, adopt a high-risk, one-asset strategy and turn their houses into a futures market. Add in irresponsible lenders, like Vancity with their laneway and free-down payment mortgages, plus CMHC, which strips away banker risk and gives cheapo loans to people without money. Low rates, easy credit and market-bending policies have bred greed and entitlement. It’s classic bubble thinking.
But there’s an even greater cause. It’s Mom.
Seriously. If the market were left to its own devices, house prices would have started to wither several years ago. Today 42% of all first-time buyers rely on the Bank of Mom for the down payment – a reliance that is swelling along with house prices. BMO also found that an equal number of move-up buyers are being financed by parents, most of whom are tapping their own windfall equity to keep the party going.
As you might expect this has bred the very kind of irresponsible, anti-social behaviour the moist Millennials are accusing everyone else of exhibiting. Almost half (48%) of Mom-financed first-timers are willing to jump into a bidding war, as are 36% of the upsizers. And here’s the most telling fact (that you will not hear on the steps of the VAG today): without the Bank of Mom 40% of first-timers and a whopping 50% of the move-up crowd would not be buying.
If that were the case, if this torrent of money from the hated Boomers and local families was not gushing into the real estate market to support the entitlement of the virgins, prices would descend rapidly. But, it’s so much easier to blame the Chinese. The premier. The oldsters. The system.
Of all the things wrong in the world to vex about – climate change, over-population, ISIS, Canada at war, public debts and deficits, punishing taxes, animal depopulation, homelessness, a sliding economy – the young protest over real estate.
We are so arrogant.