When I moved to Ambleside in 2015 from another Vancouver suburb, I was intrigued by many seemingly odd real estate situations. For instance, in an area that was screaming loudly for more affordable housing, many units in my building, which is and was always affordable, had remained empty for many years. In doing my research I found that some of these empty units had not been put on the market within the past five years. Why would someone willingly pay taxes and maintenance, often amounting to around three percent of the unit value, and continue to pay this amount year after year on an asset that had not maintained its value.
One answer to this question may be found in Matthew Soules book entitled "Icebergs, Zombies and the Ultra Thin". His thesis is that since the 1980's, there has been a movement toward "financialization" of real estate. Previous to this, people bought homes primarily to live in or to receive rents from. If real estate values increased in time that was simply a bonus. Since the 80's, people started buying real estate expecting it to act like a stock market commodity. It appears to be a safer way to preserve capital over time. With increasingly unstable areas of the world, many people from other countries have sunk their capital into real estate in safe countries like Canada resulting in many empty homes in my neighbouhood.
Ambleside has a very low tax rate compared to similar communities in the U.S. and Canada. As a result, real estate sales have become the predominant industry in this area. It will be interesting to see how recent legislation such as the empty home tax and restrictions on foreign buyers plays out over time.
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