Vancouver is slapping thousands of empty homes with a new tax as part of a government effort to tame the out-of-control Real Estate bubble that just won't quit.
Approximately 4.6% or 8,481 homes in Vancouver have stood empty or underutilized for over six months in 2017, down from 10,800 in 2016 according to declarations submitted to the municipality by homeowners.
The City of Vancouver says Empty Homes Tax filings have found about 8,500 empty or underutilized properties. That's about one-third the number it estimated in a report to council last summer, using Census statistics. #VanRe pic.twitter.com/aQX9F9t34E— Simon Little (@simonplittle) March 7, 2018
Empty properties will be charged a 1% tax on the assessed value - not much, but with average detached home prices hovering below C$1.8 million, attached units going for C$715K and condominiums at C$571K, 1% is still a chunk of change.
Greater Vancouver detached average sales price drops 1% year over year in February. pic.twitter.com/9wqr4LfgNW— Steve Saretsky (@SteveSaretsky) March 2, 2018
Of note, around 61% of the empty homes are condos, while multi-family properties made up around 6% according to the city government. Over 25% of the empty properties are in downtown Vancouver.
Vancouver condo price to dips to $1100/ square foot in February. A 21% increase year over year. pic.twitter.com/5VBYgq9LeH— Steve Saretsky (@SteveSaretsky) March 2, 2018
“This is not insignificant considering that the rental vacancy rate is less than 1% in Vancouver,” said RBC senior economist Robert Hogue. “This kind of data is completely new so it is difficult to put into context.”
While the new tax will hopefully encourage owners of empty properties to rent them out or sell, Canadian officials have tried a bevy measures to try and apply the brakes.
In 2017 the provincial government of British Columbia raised its foreign buyer tax from 15% to 20% to target offshore investors blamed for pushing up prices. Toronto, Canada’s biggest city, followed suit with a 15% tax in April.
Before the foreign buyer tax, sales agents said investors in Hong Kong, China and other parts of Asia were acquiring up to 40% of Vancouver condominium projects marketed abroad, absorbing the more expensive units that domestic buyers could not afford. -The Guardian
Perhaps rising interest rates, U.S. tariffs (sans exemptions), and the next economic contraction will take care of Vancouver's overheated market the good ol' fashioned way. The record 55,000 units under construction will undoubtedly add to the mayhem once prices retreat to reality.