dysfunctional real estate market

Photo by Jelle Harmen van Mourik on Unsplash

Richard Wozny has produced 1,200 studies for the public and private sectors on more than $100 billion worth of real estate projects.

But the Vancouver-based commercial property analyst became acutely aware of the harsh indirect consequences of Metro Vancouver’s real-estate investment boom while being treated for non-smoking lung cancer at Lions Gate Hospital in North Vancouver.

When the nurses, aides and doctors asked what he did for a living, the president of Strategic Site Economics Ltd. would tell them with a smile: “’My job is to make sure everyone makes the most of their real estate. That means ensuring the top one per cent make ever more money.’”

Given his open demeanour, hospital staff would soon start telling Wozny about their own housing difficulties — about not being able to live comfortably in Metro Vancouver, regardless of their income. Even relatively well-paid doctors were struggling.

“The middle class, and those who serve in the medical profession, tend to be compassionate, skilled and essential — and it is not logical they can’t afford housing,” Wozny said in a recent interview.

Inspired by the philosophy courses he studied in university, Wozny wants, in the time he has left on the planet, to give something back to health care providers, who to him in turn symbolize Canada’s valuable middle class.

He has started by producing a groundbreaking report for government officials and the public, titled Low Incomes and High House Prices in Metro Vancouver.

Its main finding is that a “large, mysterious, untaxed pool of international capital” is being converted into speculative investment in residential real estate in Metro Vancouver.

And much of that investment capital, Wozny discovered, is being subsidized by tax avoidance and evasion: It gives housing speculators an unfair advantage over average taxpaying citizens.

“I think the creation of the middle class is one of the greatest achievements of the past century,” Wozny said.

“And taxes are what makes it possible. Taxes are the price we pay for civilization.”

It was the summer of 2016 when Wozny received his deadly diagnosis: Adeno carcinoma. At age 62, his lungs are drained of fluid each week. Supported by family, he must regularly endure chemotherapy meant to prolong his life.

Despite his difficulties, he still has the energy to do the research to support the position that real estate investment, which he calls “speculative demand,” needs to be controlled by stricter regulations, and increased taxes and fees.

A second-generation Vancouverite, from the Kerrisdale neighbourhood, Wozny says he’s a fiscal conservative who believes the best way to support B.C.’s middle class is by having everybody pay their share of taxes.

Metro Vancouver has become a place of radical inequality, he said. There is no longer any realistic connection between the city’s average wages (which are low by Canadian standards) and real estate prices.

If all Metro residents shared the burden of paying for public infrastructure, he said prices would drop to the point where the market would function properly and the middle class would find housing more affordable.

“Housing in this dysfunctional market has become a reflection of unequal rights and obligations. Government intervention is obviously required,” Wozny said in an interview, during which his friendly, energetic demeanour belied his grim medical prognosis and treatment regimen.

The immense volumes of foreign capital finding their surreptitious way into Metro Vancouver’s residential real estate, he said, are largely “unaccounted for, untaxed and unregulated.”

One of the problems is B.C. politicians have been relying on this foreign capital to encourage Metro Vancouver to expand rapidly, with new buildings and towers. But Wozny said growth comes at a cost: It requires infrastructure.

“Politicians don’t want to make growth look hard, but it’s not painless. Everyone is suffering with fewer services. Traffic congestion is a perfect illustration.”

Despite what provincial and municipal politicians have done in the past, Wozny believes that through proper regulation and taxation “urban growth can pay for itself, as it does elsewhere.”

“Congestion and the decline of equal access to public services confirm that government can and should collect more from real estate speculators and then invest those funds into expanded public services.”

Unlike the stock market, Wozny said, residential real estate “is not meant to be an investment vehicle.”

Wozny’s ethical principles come in part from his student years, decades ago when he studied philosophy and world religions at Temple University in Philadelphia.

Despite ending up in the field of international property development, he thinks often of the famous ethical maxim of the 18th-century German philosopher Immanuel Kant, who taught that humans should never be used as “mere means to an end,” but always as “ends in themselves.”

What does that mean in the context of Metro’s housing affordability crisis?

“It means governments are supposed to protect our freedom to strive for our own personal goals. By allowing real estate prices to escalate to absurd levels, governments are allowing the middle class to be turned into ‘mortgage slaves,’” Wozny said.

“The middle class then becomes nothing more than means to other people’s ends. Their primary utility is reduced to enhancing the wealth of those who already have wealth. Since every capitalist understands that the market cannot solve every problem on its own, we obviously need to rely on regulation to fix market failures like this.”

In practical terms, Wozny said Kant’s dictum means no one should be a “free rider” in B.C.; that no one should assume others will pay for the roads, services and schools that benefit everyone.

One step toward fairness, said Wozny, lies in the recommendations of scholars who have been proposing certain property tax reforms, based on precedents from other jurisdictions.

SFU public policy specialist Josh Gordon and others have proposed an idea that appeals to Wozny. Gordon would like the B.C. government to introduce a large annual property surtax that can be offset by income taxes paid, with concessions given to older people who don’t work anymore and those who have paid a lot of income tax in the past.

Recognizing with a smile that bringing about fairer tax laws is not what every terminally ill patient focuses on, Wozny is also writing about his philosophy of life and death. He has written a wry essay titled The Depths of Despair: A Magazine for Connoisseurs of Sorrow and Grief.

When Wozny first received his diagnosis and learned about his “short and painful future,” he said it caused him great sorrow. But he’s now able to face the terror and the unknown with confidence. It’s clear his positive attitude steels his determination to help Metro’s struggling middle class find affordable housing.

“This is my client work now. I am going to do what I can for them in the time that I have. So I can feel better about going. I’m not doing this as penance. I just feel there is a terrible injustice being done.”

Prepared by:
Douglas Todd
VancouverSun

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