People buying multi-million dollar homes in Metro Vancouver are also reporting extremely low incomes, at least according to a new report from Site Economics on recent tax data.
The report found that areas with the highest real estate prices – Vancouver, Burnaby, and Richmond – had some of the lowest reported incomes.
And the trend applied vice versa as well, places with the lowest home prices like Port Moody, Coquitlam, and Maple Ridge often had some of the highest incomes in Metro Vancouver.
Steele & Drex spoke to the author of that report, Richard Wozny, as well as Professors Tom Davidoff from UBC and Josh Gordon from SFU about why there would be such a shocking disparity.
To start, Wozny says it’s hard to imagine that the disparity would be caused by demand.
Instead, he says there may be something slightly more nefarious going on.
“What it appears to be, by inference, is that there is a lot of money in Vancouver that is unknown to the government of Canada.”
And Gordon, who works in the School of Public Policy at SFU, agrees with that assertion.
He says the numbers suggest a large share of the real estate market in Metro Vancouver is foreign money.
Which, in turn, creates an issue when it comes to affordability, Gordon says.
“What that does is push people making reasonably high incomes in Vancouver out to the suburbs.”
And it makes for some skewed statistics, as Gordon says the price of an average detached home in Richmond is nearly 28 times the average income.
In fact, Wozny says Richmond’s average income was lower than some rural logging towns in the interior.
That wild discrepancy, according to Davidoff, is more or less intended.
Davidoff, a professor at UBC’s Sauder School of Business, says B.C.’s tax system even encourages such a system.
“I don’t know if that’s even a failure to pay the taxes you’re supposed to pay. The problem is the tax structure is wrong.”
He says the fact that the province has low property taxes and high sales and income taxes is a message from the government that as long as someone comes to B.C. with money, they don’t have to make much.
It’s a stance Gordon agrees with. He says the unbalanced taxation policy is part of why B.C. is so attractive to foreign buyers.
“That’s the thing that the provincial government always touts, people are investing in B.C., etcetera. Essentially, it’s because we’ve laid out the red carpet for these people and we are subsidizing, in effect, very wealthy homeowners.”
He says the unbalanced taxation policy even punishes Metro Vancouverites.
“Everybody is benefiting from the investments that are gained from public taxes, but people aren’t paying their fair share.”
Wozny says it’s an issue the report found was farther reaching than once thought.
“Somehow, someway, it has become more of the privatization of the profit and value of the city, and the socialization of all the costs.”
And as Gordon says, it’s an issue that needs to be addressed by government soon, before it hurts Metro Vancouverites even more than it has.
“They are stressed, they are frustrated, and it’s no mistake that Vancouver has some of the lowest reported life satisfaction scores in all of Canada, because this is just a situation that doesn’t work for locals.”
With files from Tristan Martin-Woodhouse