{"id":11254,"date":"2023-10-02T06:31:41","date_gmt":"2023-10-02T13:31:41","guid":{"rendered":"https:\/\/www.stevesaretsky.com\/?p=11254"},"modified":"2023-10-03T06:33:25","modified_gmt":"2023-10-03T13:33:25","slug":"the-naughty-list","status":"publish","type":"post","link":"https:\/\/www.stevesaretsky.com\/2023\/10\/news\/the-naughty-list\/","title":{"rendered":"The Naughty List"},"content":{"rendered":"\n
Happy Monday Morning!<\/p>\n\n\n\n
The housing crisis in this country gets a lot of attention, as it should. Fixing it, however, is proving to be rather difficult. Over the past several years we have attempted to beat demand over the head with a blunt instrument. The list of policy measures include, a foreign buyers tax, empty homes tax, a speculation tax, an increased property transfer tax on luxury homes, increased property tax on luxury homes, a foreign buyer ban, and a mortgage stress test just to name a few. You\u2019ll notice there\u2019s a recurring theme here and it has to do with taxes. We\u2019ll circle back on that shortly.<\/p>\n\n\n\n
It turns out killing demand has proven rather challening. Especially when the feds are hellbent on maintaining current levels of immigration. Canada\u2019s population grew by 1,050,000 in the second quarter, the highest rate of growth in a single year since 1957. So now we are going to try the supply side. According to CMHC, Canada needs about 3.5 million additional housing units by 2030 to restore affordability. But what the hell does that even mean?<\/p>\n\n\n\n
It means over the next six years we need to average 583,000 housing completions per year. Over the past five years we have averaged just over 200,000 completions per year. In other words, it\u2019s never going to happen, but we\u2019re going to try anyways because we have to.<\/p>\n\n\n\n
Governments at all levels are now ambitiously rolling out new measures to ramp up housing construction, including the removal of GST on new rental construction, provincially mandated housing supply targets, and blanket rezoning at the municpal levels. There\u2019s just one thing standing in the way, economics.<\/p>\n\n\n\n
New housing supply costs money, lots of it, and money is not only getting harder to find, but a lot more expensive. That\u2019s largely by design as the Bank of Canada tries to kill spending to regain price stability. Monetary policy is working in direct opposition of fiscal policy.<\/p>\n\n\n\n
The feds are trying to counter-act this cyclical downturn by removing GST on purpose built rental construction and handing money to municipalities who approve redevelopment. Even then, its proving not enough.<\/p>\n\n\n\n
The two municipalities set to receive federal funding \u2014 Surrey and Burnaby, the second and third largest cities in B.C. by population \u2014 had applied to the federal government’s Housing Accelerator Fund, a $4-billion program “meant to remove barriers and support the development of affordable, inclusive, equitable and climate-resilient communities.”<\/p>\n\n\n\n
Both cities had received letters from the housing minister saying they had received the funding, but that’s now in question due to Metro Vancouver Regional District’s proposed fee increases to help pay for upgraded infrastructure.<\/p>\n\n\n\n
Metro Vancouver collects fees known as development cost charges (DCCs) for new residential and non-residential developments in the region. <\/p>\n\n\n\n
The regional district is moving ahead on the proposed increases to DCCs, due to a desire by local politicians to reduce the rate of property tax increases projected in the years ahead<\/a>. <\/p>\n\n\n\n “We have four sewage treatment plants that need to be rebuilt at the same time,” said Metro Vancouver vice-chair John McEwen. <\/p>\n\n\n\n “The taxpayer is already put to the limit. So we’ve come to the decision and realization that growth needs to start paying for growth, and that’s the only way we can move forward.”<\/p>\n\n\n\n The overall costs, once fully implemented in 2027 as planned, would be significant: an analysis by Coriolis Consulting estimated that the increased fees would cost developers an additional $11,360 to $14,657 for every new apartment unit.<\/p>\n\n\n\n