Stephen Rees's blog

Thoughts about the relationships between transport and the urban area it serves

Posts Tagged ‘house prices

“British Columbians flee rising housing costs”

with 2 comments

“Politicians are not taking account of the affordability challenge in their policy making, continuing whenever the mood strikes to raise government fees and taxes.”

Read more: Columnist Babara Yaffe of the Vancouver Sun behind a paywall

Fees, yes – taxes? Really??

The whole thing stinks from sloppy writing, I think deliberately sloppy, which is worse. For instance the headline alone misleads since she is talking about Vancouver house prices – and there is data within the article to support that concern. But also the useful information that you can buy two houses in Kitimat as investments and still rent here. Kitimat is in BC too you know.

By the way, there are real issues up there too. Both Hawkair and Air Canada have increased flights to Terrace due to the numbers of people commuting between there and Vancouver. Not on a daily basis, of course, but finding somewhere to rent up there when that is where work takes you is really difficult.

“Politicians” is nice and wide reaching too. After all as a columnist for the Sun you would not want to go after Christy Clark too obviously. This way she can take aim slyly at the Mayors who are doing all they can to hold the line on property taxes. Those are the only taxes they are responsible for, and the increases we have seen in them have been due mostly to downloading from the province. The whole battle with the Province over transit funding is due to the province’s determination that property taxes must be raised to pay for any expansion: not taxes the province might be held accountable for. Which is why the idea of a referendum is so appealing. That way she (Christy Clark) can still talk about the “lowest income tax in Canada” since that does not have to include the MSP. Which no other province levies, but here applies equally to seniors on fixed incomes as much as people with well paid employment. And whose employer probably picks up the tab anyway.

“Whenever the mood strikes” is as close to lying as you can get. The idea that politicians in general are indifferent to public opinion and vote for tax increases on a whim is simply unsupportable, though it is a very popular line that right wing commentators like to adopt.

Let us be clear. There is a very good argument for increasing taxes, but not just any tax and not just for any project. Ever since Thatcher and Regan started swinging their axes, progressive income tax on the wealthy has fallen. That was supposed to produce increased revenues, since it was going to stimulate the economy. It never did. The math for austerity was flawed – but instinctively the right wing still clings to it. Slash social programs, cut spending that goes to the poor, the sick, the needy. But make sure our friends are taken care of. The optics of wheelchair fees at the same time as increasing the salary of political advisers could not be worse, but there’s a long time before the next election. And even when the top tax rates fell, the rush to hide income offshore increased.

Barbara Yaffe makes a very unconvincing champion for those facing affordability challenges. I am sorry that I broke my own rule about pointing to a source behind a paywall. But really, if the decline of PNG and its like is going to continue and there is less money to pay for right wing propagandists like her, then two cheers for that.

And, in all decency, I should point out that this bit is worth reading

Those in the know say the market lately is moderating, with slower sales, but prices are barely budging.

The cost of housing could be one reason why many are leaving — more Canadians have been leaving than moving to B.C. since 2011.

On a net basis, reports BC Stats, the province lost 2,234 residents in the last three months of 2012 alone.

Still, politicians are looking the other way, focusing interest and efforts on the desperately needy and homeless.

The province so far has refused to reduce the Property Transfer Tax, or forgive PST on realty fees.

That Conservative MPs and Liberal MLAs in B.C. failed utterly to foresee taxpayer ire over the imposition of a costlier HST speaks to their lack of attention to the affordability crisis.

You can read that here for free since it is “fair comment” . My experience of a price drop in Richmond is, I am told, not unique. Apparently a lot of people are getting very nervous about living on a mud flat in the middle of the Fraser and are moving to higher ground – like Metrotown. Something to do with extreme weather events, and sea level rise apparently.

UPDATE From a different source a different story but the same data. BC is losing people to other provinces but more than making that up by international immigration. And the reason people have been leaving, steadily, for some time is the need to find work.

Written by Stephen Rees

June 18, 2013 at 11:09 am

Posted in politics

Tagged with ,

Peak-oil spike reshapes the suburbs

leave a comment »

Georgia Strait

A series of interviews about the impact of rising gas prices on places that are car dependant.

But the recent rise in gas prices is more to do with short term supply issues than an awareness of peak oil plus the rapidly growing demand from China and India. And, the price is expressed in US dollars, which means that the real cost of oil for people who do not use that currency has not changed nearly as much as it appears to those that do. I think we have passed peak oil – but most people in the oil business deny that. However, big oil companies no longer dominate oil production. National oil companies in the producing states do that and they do not think they have an obligation to keep America’s big cars supplied with cheap fuel.

A new study by Oregon-based economist Joe Cortright suggests that spiralling oil prices in the last five years burst the American housing bubble that swelled partly due to relaxed lending practices and speculation.

Properties located in cities and neighbourhoods that require residents to go on lengthy commutes and don’t provide many transportation alternatives have fallen in value more deeply than those in “more central, compact and accessible places”, Cortright wrote in Driven to the Brink: How the Gas Price Spike Popped the Housing Bubble and Devalued the Suburbs.

“The collapse of the housing bubble, punctured by the gas price spoke, marks a watershed point for the nation’s suburbs,” Cortright wrote.

But it wasn’t punctured by gas prices. It was punctured by investors becoming unwilling to buy commercial asset backed paper (the hideously complicated packages of mortgages taken out by people who could not afford them that were being traded like securities). Mostly because no-one could agree on how to value them. Now, some of the growing number of mortgage defaults (which made the packages hard to value) may have been caused by people impacted by higher driving costs, but mostly the problem was the type of mortgage. Many were only affordable at a low introductory rate and became unaffordable after a couple of years as market rates kicked in. Since we did not have these new, riskier mortgages here, our suburban house prices have not (yet) fallen, but people here are being hit just as hard by higher gas prices. And higher food prices too, come to that. So far what we have seen is an increase in houses for sale i.e. they are staying on the market for longer but prices are not yet falling. Though the phenomenal rates of increase seen in recent years will be a thing of the past. At the same time of course, in BC we are also being hit by rapidly rising hydro bills after a long period of having the lowest electricity rates in North America. Plus the shift to fees and charges from income tax, which hits poorer families hardest who are at the margins of the housing market.

Yes, the American suburb is in trouble now. But oil is only part of that story. The shenanigans of Wall Street are more to blame in my view. Which actually means that the process of adjustment may take longer. Because doing something about it will require financing, and that is now harder to find.

We also know that choice of housing location in this region has not been driven by commuting costs, but mostly by availability of the housing type people wanted. Whenever this got discussed in recent years it was always said to be about “lifestyle choices” – and also the recognition that the decentralisation of employment had made the commute pattern not only more complex but also more car dependent. At the same time as we were building rapid transit and commuter rail to connect the suburbs to downtown Vancouver, so employers were moving out to cheaper locations. And very few of those are accessible by any transit service, let alone rapid transit.

Oh, that thing about house prices and distance from the centre is not news either. It has been around for as long as urban economics and was referred to in my student days as the “rent gradient”.

Written by Stephen Rees

May 15, 2008 at 10:25 am