Don't penalize Vancouver seniors for government's failure to curb runaway housing values

Peter Ladner's  Sept 14 opinion piece raises an interesting quandary about Vancouver housing prices, the dearth of detached homes, and the notion that taxpayers are subsidizing seniors to take up unused space.

The idea of an octogenarian rattling around an underutilized, empty-bedroomed $3 million Dunbar bungalow while young families are forced out of the city makes for a convenient if not somewhat mean spirited scapegoat — but let's take another look:

Let's imagine that an 80-year-old and her husband purchased their bungalow 40 years ago when the B.C. property tax deferment program was started. In 1985, interest rates were 13.25 per cent, purchase required a 25 per cent downpayment and the average price for a detached house in the city was $112,000. 

In 1985, the Province of B.C. still collected data on foreign and corporate home purchases, so we would have thus known that our homeowners were tax-paying Canadian citizens and had purchased their first home for their growing family.

In 1985, the housing market was just bouncing back from the crash of the early 1980's, and Expo 86 hadn't yet brought the world to our doorstep. Interest rates were cripplingly high, but our example family probably worked hard over the following decade, and maybe managed to save money to put their kids through university. 

Perhaps fear of the past decade's market crash had made the family risk adverse and reluctant to "trade up" as Vancouver's housing market started along its steady exponential growth. Perhaps it was the scourge of leaky condos that had bankrupted many of their peers that left our couple skeptical about downsizing after the kids had left for college. Perhaps a reverse mortgage was secured to top up a meagre pension, or the comfort of familiarity helped mitigate the onset of senility.

For whatever reason, our octogenarian has chosen to stay, be it in their Dunbar bungalow or two bedroom condo. It's a stilted notion to suggest that they are staying in place because tax policies are subsidizing them to do so — they are able to stay in place because tax policies are protecting them from being forced out.

The Property Tax Deferment Program exists to inure senior and/or disabled homeowners from market changes, when a fixed income likely means they wouldn't be able to keep up with steadily increasing property assessment values and resultant property tax.

These taxes aren't being forgiven, they are being deferred to be paid on the ultimate sale of the home. 

Should — as Ladner suggests — tax deferrals be means tested, consider residency history, and apply a more robust interest rate against the rebate at point of sale? Absolutely, but let's be careful not to mischaracterize home-owning seniors as wealthy in the same breath as suggesting they are disadvantaging young families.

Even without tax deferral, the market is squeezing young families out of the city. There is a certain irony that of all the other potential displacement factors: speculation, flipping, foreign investment and the luxury housing market — property tax deferment for seniors and disabled is the only one we are accurately tracking and monitoring. 

It's no secret that developers are running out of available land in Vancouver and that stagnant land is the antithesis of growth, so I'll concede that there may be a very real business model to consider. If we want seniors to downsize and open up that market, let's incentivize not penalize. And if we want to encourage housing affordability, let's consider all the factors and enact sensible policies that will ensure housing for everyone in all stages of life.

Originally published in Vancouver Courier

Stock Photo : Graphicstock