REAL ESTATE
Falcon accuses NDP of misdiagnosing the market
The B.C. Liberal leader says the province focused on demand-side measures when we needed more supply
T
by Charlie Smith
he Georgia Straight initially planned to put B.C.’s minister responsible for housing, Attorney General David Eby, on this week’s cover. We were curious to hear how Eby planned to follow through on his previously stated objective to increase the supply of housing when municipalities have so much control over zoning. We also wanted to hear Eby’s response to arguments by UBC professor Patrick Condon that asset inflation—in the form of higher housing prices—is largely a result of monetary policy set by the Bank of Canada. In fact, the money supply in Canada doubled from 2009 to 2019 as borrowers enjoyed sustained low interest rates. But Eby chose to decline the request for an interview. B.C. Liberal Leader Kevin Falcon, on the other hand, was willing to field our questions on how he plans to address the high cost of housing. This explains why he, and not Eby, is on the front page of this newspaper. When reached by phone in Surrey, Falcon made a point of describing Eby as a “disaster of a housing minister”. “The NDP’s approach has been just completely wrong-headed,” Falcon said. “And for us to get different results, we have to diagnose the problem properly. The NDP diagnosed it wrong from the outset.” According to Falcon, Eby and the NDP insisted before forming government in 2017 that foreign Chinese buyers were largely responsible for driving up prices. As a result of this “misdiagnosis”, Falcon said, the NDP’s solution to affordability was to load a lot more taxes onto housing to curb demand from these foreign buyers. Falcon, however, maintained that foreign buyers have never been a major part of the B.C. real estate market. In fact, he said, they typically comprise less than five percent of all buyers—and even less during the pandemic. “Here we are, just five years later, and we’ve got the highest housing prices we’ve ever seen in the history of British Columbia,” Falcon said. “In fact, last year in Surrey alone, prices are up 40 percent.” After stepping down as finance minister in 2013, Falcon worked in the development industry as the executive vice president of Anthem Capital Corp. He thinks that if the NDP had fully acknowledged the magnitude of the shortage of new housing after 2017, prices wouldn’t be nearly as high as they are today. “We’ve had constrained supply for far too long,” Falcon said. “The demand continues to grow. And in the absence of supply, there is going to be a driving up of prices. This is simple economics and something that the
B.C. Liberal Leader Kevin Falcon (above, with wife Jessica and daughters Rose and Josephine) described the NDP’s David Eby as a “disaster of a housing minister”. Photo by John Lehmann.
If we don’t have the housing stock, that is just going to push that demand and make it very, very challenging. – B.C. Liberal Leader Kevin Falcon
NDP completely misread.” He promised to take a “totally different approach” if he becomes premier after the next election. “I will make sure through legislation that local governments are doing their bit to ensure that we get the kind of supply and the kind of housing that we’re going to need,” Falcon said. “Young British Columbians, in particular—first-time buyers—will be able to see a credible path to homeownership.” He insisted that 25 percent of the cost of every new home or condo is made up of taxes. In making this claim, he included everything from the property-transfer tax to the provincial sales tax to the vacant land tax to the school tax to municipal development cost charges and communityamenity contributions. Falcon said that if a municipality’s official community plan identifies new density in an area, there should be no requirement for a public hearing. Plus, he thinks that municipalities that fail to meet their targets
for population growth under the Livable Region Plan should be convinced to do this with carrots and sticks. When it comes to rapid-transit projects, Falcon said that as premier, he would “take a much more direct role in determining what kind of density we are going to see around those stations”. “It is awful that we invest billions of taxpayer dollars in these very expensive transit corridors and then we sit back and watch the municipality do almost nothing to take advantage of the huge demand from people that would love to live near a rapid transit station,” Falcon said. That prompted the Straight to ask him what goes through his mind when he goes by Nanaimo Station in an area of East Vancouver dominated by single-family homes. “It feels like we’re just missing this huge opportunity,” Falcon replied. “Like, how is this possible that we haven’t got the kind of density that we should have in an area like that so close to these stations. It’s mindboggling to me.”
Over the past year, Eby has been talking a great deal about the need for a dramatic increase in the supply of housing. That prompted the Straight to ask Falcon if voters who agree that a low supply is driving up prices can now feel safe voting for the NDP in the next provincial election. Falcon replied that this is “such an important question”. He then declared that Eby has been spending the better part of the past year getting himself educated about housing. How so? According to Falcon, by “having secret meetings with the large developer association called the Urban Development Institute”. “While I’m happy that in year six of their mandate, they are becoming alive to the reality of how the marketplace works,” the B.C. Liberal leader said, “I would say to people out there: ‘They fundamentally misdiagnosed the problem from the getgo. I don’t trust him [Eby] to bring about the right kind of changes to get the right kind of results in terms of the proposals he’s been talking.” Last moth, Eby complained that municipal governments have not approved enough housing to serve a growing population. He has suggested that the province is going to need to be “more prescriptive”, possibly through legislation. Falcon, however, claimed that Eby “essentially borrowed my idea of bringing in legislation to try and force more supply out of local governments”. “I’m just concerned that he’ll get it all wrong,” the B.C. Liberal leader added. Falcon agreed that sustained low interest rates and the growing money supply are contributing factors behind higher housing prices, but he doesn’t think that there’s a lot the province can do to address that. Nor did he express any eagerness to tinker with the Agricultural Land Reserve to free up more land for residential development. He also said that B.C. can expect 70,000 to 100,000 immigrants per year because the federal government has increased its targets to more than 400,000 per year. And many of those B.C. immigrants will settle in the Lower Mainland and look for a place to live. “If we don’t have the housing stock, that is just going to continue to push that demand and make it very, very challenging,” Falcon said. “So my objective, if I become the premier of the province, is to focus like a laser beam on…Canadian citizens that live in British Columbia [and] that have never owed a home before. And I want to make sure that we can create a path to ownership to them that is credible, realistic, and affordable. And I think I can do that.” g
MARCH 10 – 17 / 2022
THE GEORGIA STR AIGHT
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