The real problem with Vancouver’s outrageous house prices

[ACT7]

Originally Posted by ssiguy

Vancouver has the longest commute times of any city in the country including big, bad Toronto.

Are you referring to that silly TomTom study, which also said Ottawa is more congested than Chicago? That study has been discredit many times over. it's not about commute times, it's about commute time differentials between free flow and non-free flow rush hour traffic. The point being, that that's not a factor in this discussion.

[WarrenC12]

Originally Posted by Alex Mackinnon

Actually it was $200B-300B dollars as a spitball, with no known technology that could cross the Salish Sea in a remotely useful place.

Right I missed a zero... $250B.

[Caliplanner1]

Originally Posted by ACT7

Are you referring to that silly TomTom study, which also said Ottawa is more congested than Chicago? That study has been discredit many times over. it's not about commute times, it's about commute time differentials between free flow and non-free flow rush hour traffic. The point being, that that's not a factor in this discussion.

ACT7, commute time becomes relevant to the discussion at hand if research suggests that higher housing prices in Vancouver serves to force increasing numbers of low income Vancouverites further away from the city and into distant suburbs (e.g. Mission/Hope/Chilliwack etc.) for more affordable housing, thus driving them to commute (pun intended) longer distances by automobile (in large numbers on crowded highways) to job sites in Vancouver (given inadequate mass transit options)!

[WarrenC12]

Originally Posted by Caliplanner1

ACT7, commute time becomes relevant to the discussion at hand if research suggests that higher housing prices in Vancouver serves to force increasing numbers of low income Vancouverites further away from the city and into distant suburbs (e.g. Mission/Hope/Chilliwack etc.) for more affordable housing, thus driving them to commute (pun intended) longer distances by automobile (in large numbers on crowded highways) to job sites in Vancouver (given inadequate mass transit options)!

No, I think you missed the point. The TomTom study is not a comparison of absolute commute times.

[Caliplanner1]

Originally Posted by WarrenC12

No, I think you missed the point. The TomTom study is not a comparison of absolute commute times.

I guess I did miss the point because I wasn't questioning the flaws of Tom Tom's research methodology per se (which I do understand) but rather the perception of a lack of understanding as to how high house prices can impact increased (absolute) commute times (if the commute time research study is done properly).

[casper]

Originally Posted by Caliplanner1

ACT7, commute time becomes relevant to the discussion at hand if research suggests that higher housing prices in Vancouver serves to force increasing numbers of low income Vancouverites further away from the city and into distant suburbs (e.g. Mission/Hope/Chilliwack etc.) for more affordable housing, thus driving them to commute (pun intended) longer distances by automobile (in large numbers on crowded highways) to job sites in Vancouver (given inadequate mass transit options)!

I think it provide a good argument for why housing stock in Vancouver should be more expensive that Burnaby, and other areas to the east of vancouver.

People tend to put a premium on their time. The longer the commute the less desirable the location, the shorter the commute time the more desirable.

The strategy of regional town centers and having the CDB spread around lower mainland should help even out the housing prices.

Getting rid of high restrictions on buildings and zoning in Vancouver to permit more density and increased supply of apartment buildings and townhomes will also help.

[Caliplanner1]

Originally Posted by casper

I think it provide a good argument for why housing stock in Vancouver should be more expensive that Burnaby, and other areas to the east of vancouver. People tend to put a premium on their time. The longer the commute the less desirable the location, the shorter the commute time the more desirable. The strategy of regional town centers and having the CDB spread around lower mainland should help even out the housing prices.
Getting rid of high restrictions on buildings and zoning in Vancouver to permit more density and increased supply of apartment buildings and townhomes will also help.

All good points casper,...a multifaceted/multi-pronged approach involving greater decentralization of CBD employment zones, improved mass transit options, the opening up of new housing options/greater housing densities etc., all need to be pursued in concert!

[ACT7]

Originally Posted by Caliplanner1

I guess I did miss the point because I wasn't questioning the flaws of Tom Tom's research methodology per se (which I do understand) but rather the perception of a lack of understanding as to how high house prices can impact increased (absolute) commute times (if the commute time research study is done properly).

Not arguing with that per se - your comment was about Vancouver having the highest commute times in the country, which it doesn't. So my interpretation of your post was that, on top of other factors, Vancouverites have the worst commute times in Canada. I don't disagree that commute times will factor in to where people choose to live.

[Caliplanner1]

Originally Posted by ACT7

Not arguing with that per se - your comment was about Vancouver having the highest commute times in the country, which it doesn't. So my interpretation of your post was that, on top of other factors, Vancouverites have the worst commute times in Canada. I don't disagree that commute times will factor in to where people choose to live.

I wasn't the one positing that Vancouver has the highest travel times. That was another contributor, ssiguy. All I tried to do was explain what I thought was being misunderstood (re: the SPATIAL link between high/fast rising house prices/low or stagnant incomes and ever increasing commute times/highway congestion)!

[Steveston]

I apologize if this ground has already been covered (don't have the time to read all the previous posts), but I hope people have read this study from Metro Vancouver, which puts real numbers to something we all know anecdotally: that there is a real cost to living further out in the suburbs.

http://www.metrovancouver.org/servic...Report2015.pdf

[Caliplanner1]

Originally Posted by Steveston

I apologize if this ground has already been covered (don't have the time to read all the previous posts), but I hope people have read this study from Metro Vancouver, which puts real numbers to something we all know anecdotally: that there is a real cost to living further out in the suburbs. http://www.metrovancouver.org/servic...Report2015.pdf

Steveston, the crazy thing here is that I really never looked closely at official data on Canada's national socioeconomic realities to effectively assess Vancouver's cost-of-living "crisis"! I just took one quick look at my wife's teacher paycheck, her modest apartment's high rent/utility bills and figured out that Vancouver isn't paradise! The bigger picture reality is that any degree of urban sprawl (due to high housing prices in Vancouver) results in higher service delivery costs/potential debt to local governments and their low wage earning constituents!

[twoNeurons]

Originally Posted by Caliplanner1

High house prices eventually spills over into higher rent prices which eventually hurts the increasing number of lower income folks (usually the younger or less professional workers) towards driving such workers (pun intended) either out of Vancouver (thus encouraging urban sprawl and longer environmentally damaging commutes) or out of the province. High housing costs/prices can also serve to deter certain industries from locating to B.C. as operational costs will be potentially higher. Unlike New York City or Toronto where higher house prices are linked more so with a robust economy that offers multiple opportunities to earn big salaries in a variety of interesting positions, Vancouver's local economy and attendant job market shows no such reality of vibrancy/diversity etc.!

Housing prices and rents aren't completely correlated. The thing that has happened though is that accommodations have gotten smaller. This is likely a combination of Asian immigrants (who by and large are NOT super-wealthy Chinese millionaires) are used to smaller accommodations in the crowded cities they came from.

However, rental prices are more or less tied to income levels. This is why Vancouver is less affordable than San Francisco or New York, because those cities command higher average wages.

As an extension of this, house prices are only somewhat related to income levels. Houses rise and fall but aren't tied as closely to wages as rentals are. To put it another way, rents are more or less regulated by what people can afford monthly, house prices are regulated by what kind of debt people can take on.

With historically low interest rates, lax borrowing regulations, low risk for banks (CMHC), and a speculation culture, house prices go up. We've had a perfect storm of factors including our very own "Emmanuel Goldstein" in the form of "Wealthy Chinese Speculator." We are our own worst enemies and have been taking on record levels of debt, much more now than the US ever saw in 2008.

What takes people away from Vancouver is, in part, higher cost of living, but mostly the evaporation of the dream of eventually owning anything. This desire is strong.

[Caliplanner1]

Originally Posted by twoNeurons

Housing prices and rents aren't completely correlated. The thing that has happened though is that accommodations have gotten smaller. This is likely a combination of Asian immigrants (who by and large are NOT super-wealthy Chinese millionaires) are used to smaller accommodations in the crowded cities they came from. However, rental prices are more or less tied to income levels. This is why Vancouver is less affordable than San Francisco or New York, because those cities command higher average wages. As an extension of this, house prices are only somewhat related to income levels. Houses rise and fall but aren't tied as closely to wages as rentals are. To put it another way, rents are more or less regulated by what people can afford monthly, house prices are regulated by what kind of debt people can take on. With historically low interest rates, lax borrowing regulations, low risk for banks (CMHC), and a speculation culture, house prices go up. We've had a perfect storm of factors including our very own "Emmanuel Goldstein" in the form of "Wealthy Chinese Speculator." We are our own worst enemies and have been taking on record levels of debt, much more now than the US ever saw in 2008. What takes people away from Vancouver is, in part, higher cost of living, but mostly the evaporation of the dream of eventually owning anything. This desire is strong.

With low mortgage rates why aren't more local Vancouverites able to afford to buy houses?? You guessed it.........low wages/high debt burdens among the masses of workers within the local economy/local housing market etc.!!!

You however reinforce my point above by saying; "To put it another way, rents are more or less regulated by what people can afford monthly". Precisely....renters generally tend to not have sufficient income/resources to qualify for mortgages in a super heated market.

Increasing numbers of lower income customers in the rental market will trigger the law of (excess) "effective" demand over (limited) effective supply which in time will result (if more rental accommodations are not made available over the short-term/run) in higher rental prices!

[Delirium]

here's the answer!

Luxury $18 million Vancouver penthouse for sale — to local buyers only, developer says

The 360-degree view comes with a 6,830-square-foot penthouse, and solo occupancy on the 48th floor of the Private Residences at the Hotel Georgia. Half the interior is unfinished, a blank canvas. The rest is temporarily staged. The developer who built it, Bruce Langereis, gives a tour and names his price: $18 million.

There’s a caveat. Only a local Vancouverite — or an aspiring one — should apply.

Full article and video; http://news.nationalpost.com/news/ca...developer-says

while this makes for good PR, it's a bunch of BS. no one is going to turn down 18mil just because the person doesn't live here full time. how long is he going to wait for the right candidate? besides, anyone with that kind of cash is not exactly mingling in the common areas or going to potlucks.

[Caliplanner1]

Originally Posted by Delirium

here's the answer!

[B][SIZE="3"]Luxury $18 million Vancouver penthouse for sale — to local buyers only, his price: $18 million. There’s a caveat. Only a local Vancouverite — or an aspiring one — should apply.

....."or an aspiring one"......is a cute legal loophole.....as many foreign billionaires do aspire to be convenient "Vancouverites"!

[whatnext]

Originally Posted by casper

I think it provide a good argument for why housing stock in Vancouver should be more expensive that Burnaby, and other areas to the east of vancouver.

People tend to put a premium on their time. The longer the commute the less desirable the location, the shorter the commute time the more desirable.

The strategy of regional town centers and having the CDB spread around lower mainland should help even out the housing prices.

Getting rid of high restrictions on buildings and zoning in Vancouver to permit more density and increased supply of apartment buildings and townhomes will also help.

The "we can just build our way to affordability" mantra is very naive. It hasn't worked thus far in Vancouver.

A lot of the price distortion making areas closer to downtown desirable are offshore buyers looking to be near so called "good schools" or UBC.

[casper]

Originally Posted by whatnext

The "we can just build our way to affordability" mantra is very naive. It hasn't worked thus far in Vancouver.

A lot of the price distortion making areas closer to downtown desirable are offshore buyers looking to be near so called "good schools" or UBC.

The "we can just build our way to affordability" is an instance of the "law of supply and demand". Supply more housing inventory and at some point prices start to drop.

The price distortion of the downtown core being more expensive and the housing stock west of Main being more expensive has existed for decades. It has little t do with the investors being from one country or another.

[Kisai]

Originally Posted by Alex Mackinnon

All the options suck.

Every time the idea is floated, the best options are so expensive (Ferry fares would need to hit 400$ to be viable) there would be no return on investment. Go look at Japan... https://en.wikipedia.org/wiki/Seikan_Tunnel , 53KM tunnel, 23KM of it is under water. It's a rail-only tunnel.

There is no possibility of making a vehicle tunnel that long due to ventilation requirements. So the obvious solution for BC would be to make it a passenger/freight rail link. But no such thing will ever be built because neither provincial or federal government can see past one election cycle. (That tunnel took 30 years to build, and the reason it was built had a lot more to do with two of their ferryboats sinking in bad weather and taking a lot of lives with it.)

Which ties into one of the reasons why Property is so expensive in BC in the first place. There are no rail transportation links to more than two cities in BC from Vancouver (Kamloops being the only one.) If you want to go to Prince Rupert or Prince George you have to go all the way to Alberta first.

If every city in BC had equally good rail transport, people would not feel they have to live and work in downtown Vancouver. Likewise if internet and wireless access was equally available, (office) people could work from home in any BC city and not need to commute to downtown Vancouver every day, they could come in once or twice a month.

Yet there used to be a lot more rail systems in BC. That's what people used before personal automobiles. And our Internet service providers provide expensive third-rate service to every place outside of Downtown Vancouver.

That's why people move to Vancouver in the first place. There is a net savings by not being gouged for transportation and communication costs. To a point.

All the property around me in the new condo buildings are being rented for 1500$/mo while the apartment buildings that used to sit on those locations were 500-700$/mo. AirBnB rentals in those same buildings are going for 350$/day.

At the end of the day you have to ask yourself if it's cheaper to buy or rent when you combine your costs with that of a vehicle+insurance requirement for living anywhere outside of Metro Vancouver.

[quobobo]

The "we can just build our way to affordability" mantra is very naive. It hasn't worked thus far in Vancouver.

If you think we've tried building enough, then you're most likely not familiar with Vancouver's zoning code. This is a map of Vancouver where yellow is zoned for detached homes and blue is everything else (industrial, commercial, "comprehensive development" spot rezonings, agricultural, and multifamily residential):



Stanley Park and False Creek aren't mistakes - the City confirmed to me that parks and marinas are allowed in areas zoned for other things. Even when you exclude those two, detached home zoning still takes up about 2/3 of Vancouver's land area.

"building our way to affordability" would mean allowing apartments on more than a small fraction of Vancouver's land area and doing the same in the suburbs.

(image source: my own work, using the CoV's open zoning data. 1 and 2 family districts are coloured yellow)

[trofirhen]

Originally Posted by quobobo

Note that about 2/3 of Vancouver is still zoned for detached homes.

True enough ... but at what starting prices, let alone for larger houses?