Housing measures designed to stabilize the distorted real estate market have gone too far, according to lifelong Vancouver resident Ric Pow. He and his wife are selling the Point Grey house they've lived in for 17 years — and not by choice, he claims.
"In 2002 when we moved in, our taxes were about $5,000," he said. "We just got our tax assessment for this year and it's going to be $30,000. Frankly, that's money we just can't afford."
Pow, 66, says they've been forced to defer the taxes on their $4.2-million home, which has dropped in value 30 per cent in the past 18 months.
"Part of our retirement plan has always been that we would take equity out of the home for us to survive," he said. "So our entire retirement savings is down 30 per cent."
Pow is joining some other Vancouver homeowners in blaming an array of government policies for driving down home equity, including new provincial taxes — school tax, foreign home-buyers tax, speculation and vacancy tax— along with the federal mortgage stress test.
"A cooling off of the market would be fine, meaning that house prices stopped going up," he said. "But this is not a cooling off, this is causing house prices to crash."
'We're monitoring month to month,' says finance minister
B.C. Finance Minister Carole James insists the market is seeing a moderation, not a crash, and she has no intention of taking the foot off the pedal anytime soon.
"I think the majority of British Columbians would tell you that we have a ways to go yet for housing to be affordable," said James, adding she's encouraged with the direction of the real estate market.
It aligns with a report from the International Monetary Fund this week, which said it would be 'ill-advised' for Canada to ease up on policies designed to gradually slow the housing market.
"We're seeing a moderation in prices and an increase in vacancy rates," James told CBC. "The tools we put into place plan seem to be having a positive impact and it's something we're monitoring month-to-month."
She makes no apologies for those who have used the housing market as a stock market, pointing to speculators who bought to make a quick buck rather than a home to live in.
"For the majority of families who've entered into the market in the last few years, they're looking for long-term homes — they're not looking to get in to speculate on the price going up and then sell two years later," James added.
'Multitude of factors' slowing down housing market
Real estate agents who've noticed a slowdown in activity on the ground have anecdotal stories of vulnerable buyers.
"You have people who were making speculative purchases that maybe don't have the financing to close," said realtor Steve Saretsky. "If the appraisal values don't come in where they need to be because the market's dropping, that makes financing more difficult."
He alluded to possible red flags in the long term, pointing to markets like Miami that were in a similar position about a decade ago.
"You saw people not able to close on their pre-sale obligations, that goes back to the developer, then the developer has to pay out the lenders, etc." he said. "So it could potentially unravel a bit if market conditions continue the way they are."
Saretsky believes a "multitude of factors" have contributed to Metro Vancouver's stalling market.
"The government intervention has certainly exacerbated the downturn, but it's not just provincially — the mortgage stress test, higher interest rates — they're all going to have an impact," he said. "They're all working together to really slow down the housing market here."
He added the issue has become highly politicized.
"You have two sides of the coin where people who are already in the market are obviously upset that the values are coming down and losing some equity, and then you have the other side with people that are maybe locked out, or that have kids and want them to grow up in Vancouver and they're more happy about the changes."