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Dumb luck, not wise investment responsible for Vancouver real estate windfalls

Premier remains adamant any intervention in housing market shouldn’t result in declining prices
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Premier Christy Clark’s comparison of those who bought houses in Vancouver decades ago to stock investors who managed to get in with Google on the ground floor is daft, according to columnist Jessica Barrett.

Well Hallelujah.

After months — nay, years — of not just ignoring but outright denying there's a problem in Vancouver's housing market, Premier Christy Clark has suddenly changed her tune.

Last week's announcement that the province would be closing loopholes allowing for “shady” practices such as shadow flipping as well as working with city hall to increase the supply of affordable housing is a welcome development — even if it does seem a little disingenuous.

That the about-face came just days after NDP MLA David Eby's emergency town hall meeting on housing drew more than 600 people last week points to no small degree of politicking at play. Nonetheless I'd like to welcome the premier to the conversation the rest of us have been having, pretty much exclusively, for months now.

However I'm skeptical the measures the government proposed will make any real difference for the growing number of people in Vancouver already priced out or hanging on by a thread.

That's because the premier is still adamant any intervention in our housing market should not result in declining housing prices, and thus, any loss of equity for the no doubt hard-working people who, according to Clark “made a wise investment” and are now reaping financial rewards that defied any prediction or reasonable expectation.

Now, I don't want to see the value of anybody's home plummet to levels where they are facing a loss on their investment. I don't want to see anyone's retirement nest egg go up in smoke, and that is unlikely to happen so long as Vancouver continues to occupy a place on the world's radar as an Asian gateway city that also happens to offer mild weather, mountain vistas and stunning ocean views.

But housing prices must come down if we are to continue to be a functioning city with a healthy social and economic fabric. With average housing prices for all types of housing — including condos — over  $700,000 and surging ever upwards, we have already passed the point of no return for many in Vancouver; many of them the kind of people that we need.

Last week's NDP town hall was awash in stories from double income families comprised of engineers, nurses and academics who cannot foresee themselves staying in Vancouver. We heard from retirees who would like to sell their valuable homes and downsize within the city with enough left over to finance their remaining years, but the increasing costs in the condo market has rendered even that impossible. 

It takes all kinds to make a city function, and Vancouver seems to be losing diversity by the day. And yet, according to our premier, there is nothing to be done to bring housing prices down.

“We live in a society that, if people make a good investment and a wise investment, we allow them to profit from that,” she said at last week's announcement, going on to compare those who bought houses in Vancouver many decades ago, in which to live and raise their families, to stock investors who managed to get in with Google on the ground floor.

It's a daft comparison. The return on investment Vancouver's housing market has provided property owners, particularly in the last 12 months, isn't the result of shrewd investment but of sheer dumb luck. Furthermore, investing in secure and stable housing, unlike playing the stock market, satisfies a fundamental human need. 

There is a confounding logic in the premier's taking aim at shadow flipping while refusing to contemplate measures to deflate housing prices. In her view, one group — the opportunistic real estate brokers involved in the perfectly legal practice of shadow flipping — are motivated by “pure, naked greed,” while homeowners who just happened to buy in the right place at the right time are “wise investors,” in need of protection.

In reality, both groups are profiting from an out-of-control, under-regulated market for doing basically nothing. Neither are likely to feel much of a pinch if values depreciate slightly, just enough to give the rest of Vancouver a bit of breathing room and a fighting chance.

Because Clark is right when she said a house — a home — “is the single largest investment most people will ever make.” But that is changing. Vancouver is fast becoming a place where investing in a home is a step many will never be able to take, no matter how wise they are with their money.

@jm_barrett