All forms of housing in Burnaby, big and small. (City of Burnaby)

Should Burnaby charge more in property taxes?

With 19% growth in the cost of an average single-family house, an economist says increasing property taxes could lift pressure off the market.

By Dustin Godfrey | January 5, 2022 |5:00 am

With Burnaby seeing skyrocketing housing prices last year, one economist is suggesting a property tax hike to fund more affordable housing in the city.

The BC Assessment Authority put out its annual assessments, the valuations property taxes are based on in the province, and Burnaby saw a significant increase in single-family house values.

(Note: While property taxes are based on the assessments, a significant increase in your property’s evaluation doesn’t necessarily mean you will face a significant increase in taxes. The taxed percentage of property values is formulated each year to meet the spending in the budget rather than being a static percentage of property values. This means an increase in your property valuation will only translate to an increase in property taxes if it’s a higher increase than average.)

An owner of a typical single-family house in Burnaby gained nearly $280,000 in equity last year, as the hot real estate market continues to burn.

By comparison, the owner of a typical strata unit in the city—including townhouses and condos—gained about $58,000.

The gains add up to an overall year-over-year increase in property values of 19% for single-family homes and 10% for strata homes, according to the annual release from BC Assessment.

And they amount to 2022 valuations of $1,725,000 and $646,000 respectively.

‘A generation to unwind’

While the single-family gains are steep, they’re not as high, percentage-wise, as most other cities in the Lower Mainland.

The UBC endowment lands saw the lowest change in single-family home valuations at 11% (an overall gain of about $540,000), while Vancouver saw an increase of 16% ($280,000), and Anmore saw valuations increase by 18% (about $360,000).

The remaining 29 municipalities in the region saw increases of at least 20%, with many reaching well into the 30s and even into the 40s.

Hope saw the highest valuation increase by percentage, at 45% ($190,000).

Aside from Vancouver, all other cities that border Burnaby saw higher increases. New Westminster, Coquitlam, and Port Moody saw typical single-family house valuations go up 24% ($280,000), 26% ($310,000), and 29% ($360,000) respectively.

“If the other two levels of government aren’t interested in partnering with you, then it makes it really, really difficult. We could have 1,500 units of affordable housing in the city with the land we have already offered up.”

Photo: Dustin Godfrey / Burnaby Beacon

Burnaby’s increase in strata prices was also comparably low, with only three other municipalities—Vancouver (7%), New West (9%), and North Vancouver (10%)—on par with or lower than the city.

As the region continues to see double-digit growth in housing prices, Marc Lee, a senior economist with the Canadian Centre for Policy Alternatives in BC, said it will take various levels of government “a generation to unwind this.”

“There’s no policy package you could bring in today that’s going to dramatically lower prices six months or a year from now. It’s gonna take a while,” Lee said.

“Some of that’s on the supply side. We need to open things up so that we can build more—higher densities—across the city, and allow more affordable units to be built.”

In particular, Lee said cities need to look at more infill zoning, as well as allowing things like duplexes, fourplexes, townhouses, and even small apartment buildings into traditionally single-family housing neighbourhoods.

Mayor unsure about supply

Mayor Mike Hurley said he’s not particularly convinced about the supply side of the housing argument. He noted the city’s efforts to build up in the four town centres—notably Metrotown, which has seen significant development over the years.

“I’m not too sure that supply is part of the answer, because if it was, apartments in Metrotown would have been a lot more reasonable than they are now. There’s been a lot of supply in Metrotown, but it doesn’t seem to make any difference,” he said.

He pointed to Seattle and noted a major increase in supply in that city led to minimal rent reductions. Instead, he suggested, minimum wage has made the largest difference in Seattle.

“They jacked their minimum wage to $15 an hour, which is the equivalent of $21 an hour here,” he said. “So that was the biggest affordability thing that happened in Seattle, in my opinion.”

As for more medium density—often referred to as the “missing middle”—Hurley said the city has been looking at increasing the number of areas that could see light density hikes, including townhouses and duplexes.

But he said a wholesale move to eliminated exclusive zoning that only allows single-family houses, in favour of that missing middle, is not likely any time soon.

“There’s a big gap there that needs to be filled, and then we’re going to fill that, but it takes time. Unfortunately, you can’t snap your figures and have those things done just overnight,” he said.

"One way of putting a lid on price increases, or even driving them down, is to raise property taxes.”

Photo: Shutterstock

While cities like Minneapolis have effectively ended single-family exclusive zoning, Hurley said he believes Burnaby isn’t there, yet.

“It’s going to take a while to change attitudes to that. I don’t think the residents of our city are quite ready for that,” he said.

Raise property taxes?

But Lee also pointed to another potential solution that looks at the demand side of the equation—which could also help to address rental affordability.

“I personally think we should raise property taxes and use the proceeds to buy land and make that land available to the public housing development corporations or non-profit housing developers to build dedicated affordable rental housing that is actually affordable to a lot of working class households,” Lee said.

He noted the percentage of property values that is taxed by Metro Vancouver cities, including Burnaby, is among the lowest in Canada. In Vancouver, it was about 0.25% of the assessed property value in 2021, and in Burnaby it was about 0.32%.

By comparison, Abbotsford and Victoria each charged about 0.5%, while Kamloops went as high as 0.7% last year.

And throughout Canada, even that is not particularly high. Property taxes in Toronto, Saskatoon, and London were 0.6%, 0.8%, and 1.4% of property values.

That being said, the vast majority of those cities don’t have housing prices like in Vancouver or Burnaby, meaning the actual dollar value being paid in property taxes likely doesn’t differ so much from city to city.

But “a buck is a buck,” Lee said.

“If you have a million dollars of housing value, that’s a million dollars. … You can still borrow against that. It still gives you a lot of security. You’re probably likely to spend more money just on day-to-day stuff because you’ve got that in your back pocket,” he said.

“So one way of putting a lid on price increases, or even driving them down, is to raise property taxes.”

Lee also noted other tax policies that could use another glance—particularly, the BC homeowner grants, which pay down a portion of property taxes, and the capital gains tax exemption on primary residences.

But Hurley didn’t appear convinced hiking property taxes would actually lead to the addition of more public housing.

“We have put six properties, seven properties out there for the federal and provincial governments to fund it, and we can’t even get them to fund that,” Hurley said.

“If the other two levels of government aren’t interested in partnering with you, then it makes it really, really difficult. We could have 1,500 units of affordable housing in the city with the land we have already offered up.”

Asked about whether the city, if it increased property taxes, could afford to build its own public housing, he said that likely wasn’t viable.

While Toronto has its own public housing authority, he said cities out west don’t tend to get the same kind of federal assistance.

“You would have to raise taxes quite a bit,” he said.

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Dustin Godfrey

Reporter at Burnaby Beacon

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