Let’s take a moment to talk about real estate wealth! It might be a handy cure to perennial bellyaching about property taxes.
I’m going to pull from the public tables of Statistics Canada’s Survey of Financial Security, a great source of data on wealth in Canada. The data, asking Canadians for detailed information about their collected assets and debts, run from 1999 to 2016 (with the newest data being collected now!) And guess what? They’ve got real estate data in there! So cool. We’ve used this data before to help question the popular narrative in Vancouver that “foreign investment” in Vancouver real estate should be our primary concern (we’ve got a whole lot more domestic investors… why give them a pass?)
Here let’s just look at data on real estate wealth by overall wealth quintile (From StatCan Table 11-10-0049-01) . That means we’ll divide economic families (and those outside of such families) into five groups ordered by their total net wealth. What’s the average real estate holdings in each total wealth quintile, both in terms of their principal residence and any other real estate they might own? First let’s look at Canada as a whole, then specifically at Metro Vancouver.
Here I’m taking average real estate holdings for each quintile by multiplying the proportion of those who own the asset by the average asset value of those with the asset. You’ll notice I’ve dropped the lowest two quintiles, either because there’s not enough property holders in these quintiles to provide reliable estimates (for Metro Vancouver), or the estimates are consistently below $10k (lowest Quintile) or $100k (2nd Quintile) in all years (for Canada as a whole).
What do we see? In Vancouver, no surprise, we see very heavy real estate wealth. The upper middle (4th Quintile) here looks a lot like the top quintile in the rest of Canada. The top quintile here is loaded with wealth both from their principal residence and from other real estate holdings beyond. Effectively the property tax here is a flat tax on wealth. Hooray! We’re doing a wealth tax! And while it’s mostly flat, we actually do get a bit of progressivity in this tax, both through the provincial School Tax kicking in over $3 million and the Home Owners Grant providing relief toward the lower end.
Raising property taxes on our extraordinary unearned and unequal real estate wealth: what’s not to like?