Vancouver Real Estate 'Bubble' at 30-year Peak

[jollyburger]

Interview: Townline CEO Rick Ilich Has A Different Plan For Foreign Buyers

In an interview with STOREYS last week, Townline Founder and CEO Rick Ilich explained how he views foreign investment, outlines his proposal for a regulated program that would require condos purchased by foreign buyers to be rented out for the first five years, and discusses the overregulation by government.

No, I don't disagree with it. Foreign investment, whether it be in the form of housing or whatever, has always been part of the capital stack providing solutions to business. So in the case of housing, foreign investment doesn't mean that there's a bunch of folks who are going to buy a bunch of houses, leave them sitting empty, and treat them like playing cards. They're trying to inject money into a safe economy, a relatively stable government, and they want their money to be protected, and in a perfect world, they want to make money doing it.

So, my [suggestion] is creating a system of inviting the capital back into the market and have it be part of a solution for providing rental housing. We need more time to build more rental housing and we can build more rental housing if government would start to deregulate, so let's throw all those condominiums that are coming to the market, throw them into a rental pool, but under the finance structure that we're all having to work with. We need buyers to throw that product into rental pools and I think that foreign capital would be appreciative of that opportunity. And in the meantime, industry gets to catch up and build purpose-built rental during that five or six-year window where these condos are regulated to be rental. It's a win-win.

The government has aggressively put a lid on the demand side of housing, while they keep raising the cost of producing it. To your question about the importance of foreign capital, it's not the end-all be-all. It's simply part of an equation that has made it challenging to continue to produce housing. So we're saying "invite that capital into this market." And if it's directed to [a rental pool], that's not a bad thing. That's smart economics.

Before we had that kind of thinking and we were taking our projects out for presale, we were getting some foreign investment, but — I'm trying to think of the highest point for Townline — it might have been 5%, maybe 6%. It's certainly not 50% or 75% like some people profess. But it's still 3% to 5%. What's wrong with that? That's 3% or 5% more consumer spending than we have now. Every bit helps.

Government just was extracting the hell out of housing. Every level of government had their hand out and they're creating these taxes and these fees. These fees, they always kind of have a fancy name around it, like school taxes and such, but they're wealth taxes. They were thinking, "How do we extract more capital out of this product that is being produced" and they choked it to death. There's way too many fees. In the City of Vancouver, 30% of the cost of producing a new home are fees. That's a lot of money. And if you look at the policies that they've created, every political ideology you can think of that's layered onto housing is impacting the cost of it.

We have a cost of delivery crisis and the only release valve left is government. Some of the people that I've seen in the media are talking about land prices being too high, "land is just a conduit for speculation." That boat sailed a long time ago. Land prices are dramatically reduced. I can show you pro formas from some areas around the Lower Mainland and the land can be free and the math still doesn't work. And the cost of land in Richmond, Victoria, Vancouver is down 40 to 60% from a couple years ago. It's still challenging to work because various siloed parts of government just keep layering on more costs.

https://storeys.com/townline-ceo-rick-ilich-interview/

[GenWhy?]

Huh so unless I heard wrong it's gone from a 20 year rental covenant down to 5?

[GenWhy?]

"So, my [suggestion] is creating a system of inviting the capital back into the market and have it be part of a solution for providing rental housing. "

He's so close to saying they can build purpose built rental instead. This is why I can't stand going to the UDI events it's when Rick says stuff like this on stage and Ravi "I respectfully disagree" and I'm the only one in the ballroom clapping for him.

[logicbomb]

Originally Posted by kikin

Vancouver would rate much more affordable if we actually had jobs and wages to go with it, being a desirable location to live and the best climate in Canada means people will always want to live here and sacrifice financially to do it

dollar for dollar and taking inflation into account, Vancouver real estate really isn't overpriced, it is just hard for the average worker with average skills to afford it and have anything left over to buy overpriced food and coffee

People coming here from other parts of the world are willing to live in tight quarters with many others to make it work. This doesn't mean just with your partner, but with family and friends. The same people are willing to work for significantly less to secure the job and potential PR status.

People that grew up here thinking they can purchase their own living spaces with their own income need a reality check. It may be unfair but the standard of life Gen Xers, and especially boomers had is gone.

I think we are in a lull in terms of demand as the climate crisis and subsequent impacts to other countries is going to further fuel emigration.

[whatnext]

Originally Posted by jollyburger

https://storeys.com/townline-ceo-rick-ilich-interview/

Foreign money is free to invest in REITS. They're also free to start companies that build purpose-built rentals. There is no reason to relax the the ban on the purchase of individual properties.

[whatnext]

Ah yes, remember the days when developers told us foreign buyers were 'a negligible part of the market" only to turn around and start crying now that they needed foreign buyers?

They're called out,
again.

Industry calls on government to ease up on foreign buyer ban
Kerry Gold
Includes correction
Published 3 hours ago
Updated 2 hours ago
For Subscribers

There was a time when the development industry and some policy makers insisted that foreign buying in B.C. was either non-existent or irrelevant...

...he presale condo market has dropped significantly. Many developers are now calling for governments to ease up on the restrictions on foreign buying. Some would like to see the ban and foreign buyer taxes lifted or be made similar to the system in Australia, were the ban only applies to existing dwellings....

... They cite the fact that foreign buyers, or non-residents of Canada, have represented a significant share of investor buyers in major cities like Vancouver. Non-residents own one-in-10 newly built condos, according to the letter.

Andy Yan, Simon Fraser University’s associate professor of professional practice in urban studies, said the number is in fact much higher in Vancouver. He said that, according to the Canadian Housing Statistics Program, one-in-10 purchasers of newly built condos between 2016 and 2022 were non-residents of B.C. But in the city of Vancouver, the number jumped to nearly 15 per cent, or 2,275 newly built condos....

....Ron Usher, former general counsel for the Society of Notaries Public of B.C., and presenter at the Cullen inquiry into money laundering, said that before opening the Canadian market up to foreign property investment again, governments need to ensure that existing laws are being enforced. For example, the province’s Land Owner Transparency Act was created to prevent hidden ownership behind a corporation or a trust, and potential money laundering and tax evasion. Beneficial owners are supposed to file a declaration. But Mr. Usher said he doesn’t know of any public record of a single enforcement of the law.

“They will not release the information, and there are apparently tens of thousands of non-compliant properties,” he said.

He suggests that all transactions registered with the land title office should include proof that the transaction has also been reported to Canada Revenue Agency. Also, anyone who purchases property in B.C. should have an Individual Tax Number that identifies foreign buyers who are not eligible for a social insurance number. That way, every transaction, every property flip, will be brought to the CRA’s attention.

“We’ve never had a good system for collecting those taxes, for knowing what people are doing, and so the result is, I’m sure, that we’ve lost billions of dollars in tax revenues.”...(bold mine)


https://www.theglobeandmail.com/real-est...ernment-to-ease-up-on-foreign-buyer-ban/

[kikin]

perhaps we should also be encouraging foreign money when it comes to new builds

[djmk]

there is a big difference between foreign buyers as a source of financing and foreign buyers buying a vacation property for themselves

[whatnext]

Originally Posted by kikin

perhaps we should also be encouraging foreign money when it comes to new builds

Foreign business people are quite welcome to invest in almost every publicly traded company on the TSX. I’m sure if they called up Westbank to offer to take some projects off their hands they’d be listened to.

[MIPS]

People coming here from other parts of the world are willing to live in tight quarters with many others to make it work. This doesn't mean just with your partner, but with family and friends. The same people are willing to work for significantly less to secure the job and potential PR status.

People that grew up here thinking they can purchase their own living spaces with their own income need a reality check.

This is bait. You damn well know this does nothing but incite a racially negative response.

[Tysonbrown]

I think we are past the "30 year peak".

[madog222]

This thread is now 15 years old!

[kikin]

seems we are in an extreme dip at the moment but a lot of hopeful renters still can't afford to buy right now, then in 5 to 10 years when prices inevitably climb much higher they will look back with regret similar to how it felt not being able to afford to buy in 2015 and then starting to look at the market in 2019

[GenWhy?]

Originally Posted by kikin

seems we are in an extreme dip at the moment but a lot of hopeful renters still can't afford to buy right now, then in 5 to 10 years when prices inevitably climb much higher they will look back with regret similar to how it felt not being able to afford to buy in 2015 and then starting to look at the market in 2019

What makes this an "extreme dip"?

[kikin]

Originally Posted by GenWhy?

What makes this an "extreme dip"?

prices haven't been reaching this low since 2017 when inflation has generally been extremely high otherwise, in comparison to the buying power of the dollar overall, we are in an extremely extreme dip

population in Vancouver is still growing and it will always be the most desirable destination in Canada, this dip won't last much longer imho

[logan5]

Internal government documents reveal grim housing climate in Canada

OTTAWA — As Ottawa gears up to launch a new agency to build homes faster, internal government documents describe how dire the housing situation has become in Canada.

Briefing materials prepared for incoming Housing Minister Gregor Robertson this past May acknowledge that costly housing is hurting the economy and making it difficult for people to find places to live.

The documents say the government has fallen behind on investing in housing offered below market rates, a shortfall that is hitting newcomers and vulnerable Canadians especially hard.

https://www.ctvnews.ca/business/real-est...s-reveal-grim-housing-climate-in-canada/

High rises are costly to build, so I think more focus has to be less costly multi-plexes, row houses, and townhouses. We have that zoning in Metro Vancouver, but in most cases the density isn't high enough to trigger the rapid construction of these types of homes.

For example, in Vancouver you can build a multiplex, but only up to 1 FSR. That is not enough.

The City of Burnaby has it right, where they don't have a specific density, but have parameters for lot coverage and maximum height, which amounts to an equivalent FSR of 2.0, and you can build up to 6 units. That is for one lot, which means no time consuming lot assembly.

The rest of the Metro should follow Burnaby's example.

[Sheba]

Originally Posted by logan5

The City of Burnaby has it right, where they don't have a specific density, but have parameters for lot coverage and maximum height, which amounts to an equivalent FSR of 2.0, and you can build up to 6 units. That is for one lot, which means no time consuming lot assembly.

The rest of the Metro should follow Burnaby's example.

I'm trying to remember the last time someone posted on here that Burnaby is doing it right - for the most part I've seen a lot of bashing of Burnaby's policy and how everyone should be following Vancouver's example.

[Migrant_Coconut]

Because this is the same Burnaby that dragged its heels on secondary suites and didn't want multiplexes at all until the province forced their hand. "Right" is a stretch.

[WarrenC12]

Burnaby is also the poster child for tearing down older affordable rent wood frame low rises and putting up concrete towers. All the while ignoring/protecting inefficient SFH neighbourhoods.

[seamusmcduff]

The recent multiplex changes are one of the few examples of Burnaby doing something right, but it's still something they dragged their feet on as much as possible