Housing Booms in Gateway Cities by Ley David;

Author:Ley, David; [Ley, David]
Language: eng
Format: epub
Publisher: John Wiley & Sons, Incorporated
Published: 2023-06-23T15:37:23+00:00

Ownership, Assets, Gains

Explicit in the formation of a transnational residential market stretching across the Pacific is a discourse and practice of market relations stewarding homeownership as the ‘natural’ model of urban development (Lauster 2016). This understanding expanded to fill the vacuum left by the state’s abdication of its social housing role (Suttor 2016). Renewed recession in Canada in the early 1990s raised the demand for welfare services beyond the capacity of government revenues, as the national debt ballooned from $250 billion in 1981 to over $800 billion in 1994 (in 2019$). In its radical 1994 budget the federal government slashed services, including its commitment to new subsidised housing production; five of six social housing programmes that had produced over 500,000 units were abruptly terminated (Carter 1997). Aside from modest initiatives addressing homelessness and deeply disadvantaged groups, for the next 25 years the market monopolised housing production.

A free-market solution to housing fitted snuggly with British Columbia’s right-wing Liberal government, in power from 2001 to 2017. The government was a dedicated partner with the property industry in propelling a real estate growth machine (Ley 2021).5 Property companies were the single largest group of donors to the BC Liberal party, and from 2013 to 2017 its chief fund raiser was Bob Rennie, the ‘Condo King’, who led a very successful Vancouver real estate marketing company. Both government and the property sector saw huge benefits to the investment that flowed freely into Vancouver’s real estate. For the Province it significantly enhanced tax revenues, while the growing equity among homeowners was intended to produce a satisfied and pliant electorate who had shown the good sense to invest in BC land and property. High residential prices were a commendation for good government. At the peak of a boom in 2016 that had decimated housing affordability, the Finance Minister could see only good news: ‘It’s a challenge that virtually every other jurisdiction would like to have, because it is a challenge that is associated with a growing economy’ (Hager 2016).

By their own lights, the Liberals had scored highly during their period in power (Figure 5.1). From 2001 to 2010, real benchmark prices6 for detached houses in Greater Vancouver rose from $494,000 to $929,000; in the next six years growth accelerated to $1.69 million. While median real family incomes rose a meagre 26% during the Liberal administrations from 2001 to 2017, real prices accelerated by 242%. The gap had been stark enough earlier, for real incomes declined by 5% from 1986 to 2001, while detached houses added $209,000 (42%) in value. Decoupling of this magnitude makes a nonsense of attributing prices to local incomes. The ratio between real prices and real incomes rose from 4.5 in 1986, the Expo year, to 8.1 in 2001, when provincial Liberals came to power, and to 22.3 in 2017, the year they were voted out of office. The annual rate of return to an investor or homeowner over that 15-year period would provide an impressive and sustained bonanza. Ian Young, the South

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