Home flipping has been a hot topic in recent years, with policymakers at both the federal and provincial levels introducing tax measures to curb the practice. But just how big of a factor is home flipping in B.C.’s housing market? New data from Statistics Canada offers insights into the prevalence of home flipping and its impact on the province's housing crisis.
Key Statistics on Home Flipping
Between 2019 and 2021, 2.8% of homes sold in B.C. were owned for less than a year, meeting the definition of home flipping. The rate varied slightly year by year:
- 2019: 2.7%
- 2020: 2.3% (lower during the pandemic's onset)
- 2021: 3.3% (coinciding with a sharp rise in home prices)
Flipping was more common in urban areas. For example:
- Abbotsford-Mission: 6.5% flipping rate (the highest in the province)
- Vancouver, Kelowna, and Victoria: These regions also contributed to the higher provincial averages.
Who Are the Home Flippers?
The StatsCan data reveals demographic trends among home flippers:
- Gender: Slightly more men (52.3%) than women engaged in flipping.
- Age: Flippers were older, with a median age of 47 compared to 43 for other homebuyers.
- Income: Flippers had a lower median family income ($115,000) compared to non-flipping buyers ($125,000).
- Immigrants: Overrepresented in flipping, making up 45% of flippers but only 36.3% of homebuyers.
- Businesses: Accounted for 7.9% of flipped properties, despite representing just 2.6% of real estate buyers overall.
Policy Responses to Home Flipping
Governments have introduced measures to address home flipping:
- Federal Measures: As of 2023, profit from flipping is fully taxable as business income.
- B.C. Home Flipping Tax: Effective January 1, 2025, the tax will apply to homes sold within:
- One year: 20% tax on profits.
- Two years: A sliding tax rate that decreases over time.
Does Home Flipping Drive the Housing Crisis?
Experts suggest that home flipping is a small contributor to B.C.’s housing affordability issues.
- Market Volatility: Flipping is more common in volatile housing markets, often reflecting broader price surges rather than causing them.
- Supply Shortages: Both Tom Davidoff, a UBC associate professor, and Alex Hemingway, a senior economist, argue that the fundamental issue is the lack of available housing supply for the province's growing population.
Will Flipping Taxes Help?
Opinions on the effectiveness of flipping taxes are mixed:
- Short-Term Impact: Experts predict minimal immediate effects on affordability.
- Long-Term Potential: Taxes may curb speculative flipping over time.
- Larger Solutions Needed: Addressing the housing crisis requires:
- Zoning Changes: To enable higher-density housing.
- Public Sector Investment: In affordable, non-market housing.
Conclusion
Home flipping accounts for a small segment of B.C.’s real estate market, with its impact on housing affordability likely overstated. While taxes on flipping may help marginally, the province’s housing crisis requires broader solutions focused on increasing supply and investing in affordable housing.
For more real estate insights and updates, contact Coldwell Banker Horizon Realty — your trusted partner in navigating B.C.’s dynamic housing market.
The content of this article is for informational purposes only and should not be considered as financial, legal, or professional advice. Coldwell Banker Horizon Realty makes no representations as to the accuracy, completeness, or suitability of the information provided. Readers are encouraged to consult with qualified professionals regarding their specific real estate, financial, and legal circumstances. The views expressed in this article may not necessarily reflect the views of Coldwell Banker Horizon Realty or its agents. Real estate market conditions and government policies may change, and readers should verify the latest updates with appropriate professionals.
