$89B in home equity lost across Metro Vancouver over past year, report claims
Properties across Metro Vancouver lost $89.2 billion in homeowner equity over the past year, according to a report released on Tuesday.
The report was prepared by analyzing publicly available housing data, and was released by Step Up Now, a volunteer group that lobbies against taxation.
It showed that Vancouver saw a nearly 13 per cent decrease in equity value, for a total of $43.6 billion. West Vancouver had the highest percentage decrease at 14.7 per cent, while Port Coquitlam saw a 10.2 per cent decrease.
According to the report, almost half of the billions in losses occurred outside of Vancouver and West Vancouver.
Paul Sullivan, a senior partner at a leading commercial real estate and property tax appraisal firm, crunched the numbers using data from B.C. Assessment and the Real Estate Board of Greater Vancouver from April 2018 to 2019.
Sullivan said on average, most homeowners across the Lower Mainland have lost between $50,000 to $75,000 in home equity, depending on the previous assessed value of their home and where they own property.
He said he was "not at all" surprised by his findings, citing the provincial property taxes that have been implemented over the past year, including the speculation and vacancy tax, the increase in the foreign buyers tax and the federal mortgage stress test.
"When you have a government intervention in the market place that impacts the market fairly dramatically in a short period of time, it's unfair to people who have invested all of their income into their homes," Sullivan said. "But worse, it's really unfair to those people who have bought in the past two to three years."
The NDP have brought in measures in an effort to stabilize B.C.'s housing market, openly cracking down on speculators and foreign buyers that have jacked up prices, making home ownership out of reach for many first-time buyers.
A report commissioned by the B.C. government released in early May found that five per cent of the value of 2018 real-estate market purchases were for laundering purposes, contributing to about a five per cent rise in housing prices.
The province has said it will be looking closely at all 29 recommendations put forward in the report, called Combating Money Laundering in B.C. Real Estate.
'Markets come up and markets go down'
David Mansell bought his home two years ago, at the height of the real estate craze.
But Mansell says he considers himself lucky — he's mortgage free, having bought his current home after selling his first house in Kitsilano, which he purchased around three decades ago.
He said because he doesn't plan on selling his new home in the near future, he's not too bothered by the downturn in his home equity, and he hopes it'll help the next generation.
"Markets go up and markets come down," he said.
"If it means housing will be a little more affordable — I'm not sure it's there yet — then I think it's a good thing."
Tsur Somerville, a professor at the Sauder School of Business at the University of British Columbia, said that while the overall losses in equity may appear staggering, people should reconsider how they think about the value of their homes.
"For the vast majority of people who haven't purchased a unit in the last year or two, that's essentially a loss in an asset value that they never really accessed anyhow," he said.
Sullivan argued in his report that homeowners rely on equity in their homes to fund things like "home renovations, post-secondary education, senior care costs, and retirement."
But Somerville said that a decrease in home equity won't necessarily have a noticeable impact on how people spend their money, unless people have been trying to borrow against their equity or consume out of it.
"If we've been viewing housing as this piggy bank that only increases in value, that's not the right way to think about the housing that you're living in," he said.
"I think that's part of almost a quasi-sickness that we've suffered from, because the housing market has been so strong for so long."
--Michelle Ghoussoub, CBC News