In Defence and Support of Owner Occupied Housing and the Home Owner Grant

I believe homeownership has been the bedrock of a stable and resilient economy in North America. I believe strong cities have broad and deep roots - and that a large share of owner occupied dwellings contribute to the strength of a city, making it more resilient. I do not believe the door to home ownership should be slammed shut to those who make a reasonable living within the region. I believe residents, people who live and work, who are raising their families, and running their businesses in our cities should come before those who are merely parking their money in our city or just want a place here for while they visit. I believe buying the home you intend to live in should be (relatively) easy - and that buying a second, third, fourth or subsequent home should be far more difficult. 

Recently, a politically connected economist from the University of Victoria, Rob Gillezeau tweeted that "British Columbia's Home Owner Grant has to be one of the single worst pieces of public policy in Canada. It both inflates property values and regressively transfers income with roughly a billion dollar price tag." He went on to tweet, "In both of its dominant effects, the HoG actively undermine's government's core policy objectives on the affordability of housing and fairness in distribution while being on of the province's largest budgetary items."

Dr. Gillezau makes it sound like the Home Owner Grant is some kind massive subsidy to the province's wealthiest that deprives the poorest of much needed assistance. He makes it sound like it would be a no brainer to just ditch it, and that doing so would do much good. 

Dr. Gillezau is wrong, horribly so on almost all accounts with Home Owner Grant - with his tweet engendering and encouraging political division between home owners (and specifically owner occupiers) and renters. It paints all homeowners (many of of which are struggling under the burden of heavy mortgages) as some kind of elite, it creates a target on their backs, and predictably renters heard Rob's call and sought to attack anyone who dare defend the Home Owner Grant, myself included. It also comes in the context of the CMHC (Canadian Mortgage and Housing Corporation) calling for an equity surtax on homes with a value in excess of $1M - a tax that would disproportionately impact Vancouver, Victoria, Toronto - making some of the most expensive places to live in this country, even more expensive. A $2M property would face an $14,710 each year under the proposal.

I quote tweeted (@AwaitingJuno) Dr. Gillezau's original tweet the following, "The war on owner occupied housing continues - it's almost like some would prefer that nobody own the home they live in. Further: if that's the worse, you haven't seen enough public policy."

Predictably, because twitter is both the best of places and the worst of places, the replies to my tweet illustrated that we are very deeply divided in British Columbia, both economically and politically. 

The Home Owner Grant is a $570 discount on the property taxes paid by owner occupiers - it is the same regardless of the value of the property up to a threshold which is now $1.9M. There's an additional grant for Seniors, Veterans and Persons with Disabilities. In many respects the Home Owner Grant and application for it would have been a far better tool to address the issues of Speculation and Vacancy, than the Speculation and Vacancy Tax - which has done little to actually help the issue of runaway property valuations. The Home Owner Grant differentiates between properties that are owner occupied, and those that are held for purely investment purposes. A person can only claim one home owner grant, regardless of the number of properties they own.

To be clear, owner occupiers are residents in our community who have purchased their home, typically via a mortgage that they then spend decades paying off. These are the people who live and work in our community - who pay income taxes and support our local businesses. They are not just visiting. The homes they have purchased are the places where they live - where they celebrate holidays with family, where they help their neighbours, these are the people who have the deepest roots, because they can't just leave with 30 days notice. These are the people who are most likely to carry home owner's insurance (typically as a condition of their mortgages) - who will ensure their walks are shovelled in the winter and that their home is kept in good repair. Their home isn't about maximizing their net worth - it really isn't. Any gains in property valuation, for this set of people, have been on paper - nearly unrealizable without doing what, for many is unthinkable: either moving away from their home and their community, downsizing drastically, selling & then renting, or dying.

Further, owner occupiers, build equity as they pay down their mortgages - they build their resiliency to take on the economic challenges they might face in the years ahead. Many are able to avoid relying upon the public purse when economic headwinds hit - when a person needs long term care, their home often provides the resources needed to fund it. When a person's small business is in need of financial support, it is often their home equity that provides it. When their children go to post secondary - they are often excluded from partaking in student loans, because they have the resources to assist. 

If anything - the government should do what it can to make buying and staying in the home one intends to live in a reality for as many people as possible, while making the purchase of second, third or subsequent homes difficult. If anything, the government should make providing rental housing within an owner occupied home as easy as possible - and should provide incentives if that rental housing meets a definition of affordability.

Yet to Dr. Gillezau, the Home Owner Grant is bad public policy. Let that idea sink in - in the world of really awful policy, policy that has allowed our real estate market to become exceptionally dysfunctional - to Dr. Gillezau, the owner-occupier who owns one property is part of the problem. Dr. Gillezau is okay with moving the goal post of owner occupied home ownership just a little further away, painting owner occupiers as the bad guy and ignoring the true engines of the dysfunction in the Real Estate market - the things that are locking out young adults from becoming owner occupiers themselves. 

Envy and spite make for bad policy, the calls to do away with the Home Owner Grant are rooted in envy and spite (as are the calls for a home equity tax). The calls are rooted in an ongoing march towards a province where only the exceptionally wealthy, corporations and government own property. If anything, the Home Owner Grant, might be the only bit of good policy left in this dysfunctional state of the world.