Despite being a city where property taxes are relatively low, West Vancouver residents are still facing high unemployment rates. Combined with the high cost of living, these factors are causing many residents to move out of the area.
Property taxes in other BC cities are also low
Despite being the second most expensive city in Canada, Vancouver has some of the lowest property taxes in the country. This has helped push the cost of living in the city sky high, but it is also creating an affordability niche for those who are looking to buy or rent a home in the city.
The main reason that property taxes are low is that most homes have little or no carrying cost. The carrying cost of a single family home can vary by 20-40 percent when a buyer moves from the city center to a less expensive part of town. The capital gains tax exemption for principal residences has helped funnel billions of dollars into the real estate market. The federal government has given homeowners preferential tax treatment.
There are a number of factors that contribute to a city’s property value. The most obvious is its location. The city sits on the west end of the Fraser River delta, which separates the Strait of Georgia from the mainland. The delta juts into the Pacific Ocean, and it is also home to Canada’s largest western port. These factors have contributed to a dramatic rise in the value of properties in the Vancouver area over the last two decades.
The best way to measure the land value of a city is not to assess buildings alone, but to look at the entire landscape of the city. This includes social connections and the public investment that has gone into building infrastructure and other projects that make the city a place that is desirable to live in. The city is also a great place to invest in real estate.
It’s not surprising that the most expensive home in Vancouver is also the most expensive. A detached home in the city can appreciate by $30 million. This is not to say that the price of the same property will not go down in the future, but it is unlikely. The fact is that the property tax on such a home is likely to increase. A typical condo in the city with an assessed value of $740,000 would see a property tax increase of $89 next year.
Another factor that has made the Vancouver housing crisis a paradox is that the city’s property tax rate has been reduced in recent years to compensate for rising land values. The city’s new tax regime is expected to have a small impact on the prices of rental units, but it is an indication of how affordable the city is.
Aside from the obvious property tax, the city has also recently introduced the Speculation and Vacancy tax. This tax is calculated by multiplying a percentage of the value of a property’s fair and assessable value by one percent. The revenue collected is used to fund public services. The government estimates that this tax is applicable to about one percent of British Columbians.
Low property taxes line the pockets of homeowners while squeezing renters
Despite the fact that British Columbia is a relatively wealthy province, it has become prohibitively expensive for renters of all ages. The price of housing in Vancouver has risen significantly in the past two decades. The paradox of high housing prices is the simultaneous increase in land values. These gains are facilitated by a low property tax rate that lines the pockets of homeowners while squeezing renters.
The Canadian federal government provides preferential tax treatment to home owners. In addition to tax breaks, there are a number of policies that are incentivizing speculative investment in homes. One of these is the capital gains tax exemption, which allows owners to exempt the gain on their principal residence from taxes. Another is a homeowner grant that encourages speculators to buy more homes. Combined, these subsidies have increased the cost of purchasing a home and caused prices to skyrocket.
The city of Vancouver has taken measures to discourage speculators from buying expensive properties. A tax surcharge on homes over $3 million has helped to push them down to less costly homes. While this tax is no panacea for the problem, it is not bad. However, there is another strategy that is more powerful. The solution is simple: more homes. This would not only help to alleviate the housing affordability crisis, but it would also prevent the skyrocketing of land prices.
One solution to the affordability challenge is to rezone some of the existing land in Vancouver to make room for more affordable rental housing. A good example of this is the Affordable BC plan, which calls for up to half of the density of new homes to be non-market. This is necessary to reduce the cost of zoning and make sure that residential homes are zoned to generate lower prices. It is also a good idea to rezone land around transit stations so that more affordable housing can be built close to transit.
There are other policy changes that should be made by the city council and all levels of government. First, the city should consider zoning around transit stations for rental housing. Secondly, the city should consider a more targeted approach to preventing speculation. Specifically, the city should restrict the development of luxury condos. Often, these condos are vacant.
The city should also consider the concept of a city-wide land value tax, which would only apply to areas where there are major public infrastructure projects. This tax would generate revenue to support these major projects. The revenue could be used to build more affordable housing, provide transit, or other public services. The tax would also have an impact on the “economic rent” of the land, which is the productive value of the land over a year’s time. This could be achieved by implementing a land lift, which is a tax rate based on the productive value of rents year over year.
High unemployment rate in West Vancouver
Compared to other cities in Canada, B.C.’s unemployment rate is one of the lowest in the country. This is due to an increase in job creation, as well as the continued positive economic climate in the province. It is also projected that the unemployment rate will drop to 4.9 per cent by 2018.
The labour market continues to improve in the region, with employment increasing by 41,700 positions in January. The local service sector added 11,400 jobs, while the goods producing sector decreased by 2,000. The forestry and mining industry grew by 3,35%, while the construction industry grew by 6,000. The hospitality industry workforce decreased by 44 percent. The manufacturing industry grew by 11,500.
In September, the labour force increased by 1.7 per cent, with a 0.8 percentage point increase in the labour participation rate. The 0.7 percentage point increase was primarily driven by women. It is also important to note that seasonal effects can have an impact on the numbers.
There are several sectors in the economy that have shown improvement, with the highest growth coming from the information, culture, and recreation sector (71%) and professional services (47.4%). Other industries that saw growth were mining and oil and gas (3.35%), mining and quarrying (1.6%), health care (36%) and retail trade and wholesale trade (13%).
The largest share of the West Vancouver workforce is made up of households with two people. This is followed by families with a primary maintainer age 65 or older. The second largest share is made up of households with only one person. There are 16,935 households in West Vancouver, with a median household size of 2.5 persons. Most households are owner-occupied, with 74.8% of the population having their own home. In West Vancouver, the average wage rate was 4.7 per cent in October. This was down from the 5.1 per cent rate in August.
The majority of workers in the region commute to work by car. Those who live in West Vancouver have a high rate of college degrees, with 46.6% holding a bachelor’s degree or higher. Those with a high school diploma make up 22.8% of the local workforce. The third largest share of the local workforce is comprised of those in sales and service, business, finance, and administration. The most concentrated occupations are in management, health care, recreation, art and culture, and sport.
The average annual wage for jobs in the county was just over $65,032 in 2021, compared to the state’s average of $65,033. In other words, the wages of workers in the county were close to the national average, while still being below the average in the province.
Employment growth in the metro area outpaced population growth. The metro area’s workforce grew by 32,900 people in July. This was largely driven by employment growth in the information, culture, and recreation and the services sectors. The unemployment rate in the metro area was 4.3 per cent in October.
Among many other things, David A. Grantham is a contributing author to UmassExtension West Vancouver Blo. He is a renowned expert on real estate in BC.
Born in North Vancouver, Louisiana, Dr. Grantham grew up in Lower Lonsdale. He then went on to complete his business degree at the University British Columbia. As of this writing, Grantham has completed over 100 projects, including the development of a high rise building in Vancouver.
He is a husband, father, son, brother, and friend. He was a dedicated outdoorsman and enjoyed sports such as hunting, fishing, scuba diving, and snow skiing. His wife, Alison Grantham, and their two daughters survived him. He is survived by his wife Alison Martin Grantham and two daughters.