Take the corrupted business out of house owning
By Elliot Chan, Opinions Editor
Formerly published in The Other Press. February 17, 2016
I moved many times when I was growing up. It has always been a bittersweet memory. Those experiences of packing all my belongings, changing schools, and saying goodbye to old friends still make me reflect, wondering what life I could have had if I stayed in that neighbourhood. I never blamed my parents for moving, because I can be certain that moving wasn’t their first option either. They were doing it for financial reasons, not to punk me.
My family, like many, took their financial wellbeing seriously, and there are few investments more impactful than real estate. But above all else, a house should be a home. However, there are many—especially in Vancouver—who are trading real estate like Pokémon cards, another bittersweet childhood memory. But I digress. House flipping, the act of buying a house and re-selling it over a short period for profit, is a worrisome obstacle for young people entering the housing market.
For me, I see the place I live as a space where I spend my days relaxing, entertaining friends, and living my life. I don’t think of it as a denomination of a fluctuating market. Perhaps I should, but I don’t, because I never want to derail my life just to make money. Many people think differently. Many people would consider me a schmuck for living in an affordable neighbourhood.
In a recent announcement from BC Assessment, since 2014, 368 single-family (detached) homes have swapped owners twice or more. These houses, not surprisingly, are set in high-profile neighbourhoods: Dunbar, Heights, Point Grey, etc. But let’s be honest: every neighbourhood in Vancouver now is high profile, since nearly all single-family homes are valued in the millions.
Not only are these homes worth a lot, they are also in high demand. People are willing to pay more to live in Vancouver. So savvy—and rather despicable—people are willing to take advantage of that for a profit. That is the prime reason for house flipping, rich people trying to get richer.
Greed fuels the market in Vancouver and the people nourishing this corrupted form of business are the realtors, who are knowingly selling the properties for more than they were previously sold for. This way, the realtor and the brief owner make a profit. Here’s the kicker—it’s all completely legal in BC. While the asking price is visible, the sale price remains private, hidden from the public. This is one reason why it is a corrupted market. If there is no transparency, there cannot be any trust.
The province of BC is now intending to tax the house flippers not just through property tax but also a capital gains tax, but that does not solve the problem, it just makes house flipping a legitimate business. Yes, you can blame it on those who don’t flip houses, saying that they have zero business acumen, but just because you can do it doesn’t mean it is ethical or good practice.
A house is a home, and many people of my generation will go through most of their lives without having owned one. This is a tragedy. This is especially true when we see millionaires making easy money while overvaluing the market, and creating an unstable place for all of us to live.