An infestation of for-sale signs in a local neighbourhood
According to trust researcher Rachel Botsman in her 2012 TED talk1, “the currency of the new economy is trust”. This trust between realtors and the public has been broken, according to a report by an advisory panel2 funded by the Real Estate Council of British Columbia. It was found that some realtors deliberately deceived their clients in order to receive larger commissions, and also coerced owners into selling their homes in order to get commissions from the sales. In both cases, realtors betrayed their clients’ trust for more money, revealing a disturbing lack of ethics and morality.
On June 30th, 2016, Premier Christy Clark revoked self-regulation for the real estate industry. She promised to “[prohibit] a single agent from acting for both the buyer and seller in a transaction and raising maximum fines to $250,000 for individual Realtors and $500,000 for brokerages”, according to The Financial Post3. Premier Clark’s solution fails to address important issues such as affordability, foreign investment, and speculation. Government intervention in the economy is usually inefficient and unwelcome, but in this situation where such overblown prices are rampant, it is necessary to guarantee the right to shelter for the whole populace.
To remedy the real estate situation, legislation should be passed to impose a tax on those who purchase more than one residential property. This tax would be worth 50% of the second property’s selling price and would increase in 50% increments for each additional residential property. Doing so would avoid the inefficiency and deadweight loss of price ceilings, providing more tax income for the government to funnel to education and health programs. It would also curb speculation and increase the number of homes available for first-time home owners. Affordability for renters would be guaranteed through the ruling that investors cannot leave their residential properties vacant, thus creating the need for tenants. Both investors and their potential tenants would benefit: investors earn rent while tenants have more options for housing.
Premier Clark’s decision to implement government regulation of the real estate industry is highly welcome in the current housing market, but her solutions are not enough to solve the issues present. The severely inflated prices since 2005 have been due to a dearth of ethics among real estate agents, and the current issues could have been prevented had there been more transparency present. The situation proves that the presence and adherence to a strong code of ethics is integral in both the private and public sector. For private industries, a balance between profit and responsibility to society must be struck, while in the public sector, the best course of action for all parties must be the priority, justifying government intervention.
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Photo Credit: Gobles, Gord. 4 Sept. 2012. Vancouver. https://vreaa.wordpress.com/2012/09/04/gord-goble-postcards-from-the-rubble-of-our-future/
References:
1: Botsman, Rachel. “The Currency of the New Economy Is Trust.” TED. TED, June 2012. Web. 9 Sept. 2016.
2: Kane, Laura. “British Columbia to End Self-regulation of Real Estate Industry after Damning Report.” Financial Post. National Post, 30 June 2016. Web. 8 Sept. 2016.
3: Report of the Independent Advisory Group. Rep. Real Estate Council of British Columbia, June 2016. Web. <http://www.recbc.ca/wp-content/uploads/IAGReport_June2016.pdf>.