The real problem with Vancouver’s outrageous house prices

[logan5]

Originally Posted by shreddog

How do you figure??

According to Rentboard (NW and Calg), all categories are cheaper in Calgary. And then there's food (same or cheaper in Calgary), Gas (much cheaper), insurance (way cheaper), clothes (same), buying a house (much cheaper), no provincal sales tax, monthly transit passes (2/3's cheaper), etc, etc.

So how do you figure is "a bit lower"??

The links you provided show only rental rates, but not any of the other categories you mentioned. This site does though...

https://www.numbeo.com/cost-of-living/co...2=Calgary&tracking=getDispatchComparison

So who are what do we blame high rents on? Chinese speculators and money launderers? Nope. It comes down to supply and demand. It has to.

If rental rates are not affected by foreign money, how have rents become detached from the local economy? If rental rates can become detached from the local economy without the help of rich Chinese, then it stands to reason that home ownership can become detached from the local economy without the help of rich Chinese.

[whatnext]

Originally Posted by logan5

The links you provided show only rental rates, but not any of the other categories you mentioned. This site does though...

https://www.numbeo.com/cost-of-living/co...2=Calgary&tracking=getDispatchComparison

So who are what do we blame high rents on? Chinese speculators and money launderers? Nope. It comes down to supply and demand. It has to.

If rental rates are not affected by foreign money, how have rents become detached from the local economy? If rental rates can become detached from the local economy without the help of rich Chinese, then it stands to reason that home ownership can become detached from the local economy without the help of rich Chinese.

Seriously? You're missing the very obvious data point, which was pointed out by the latest Statscan release. More Canadian are having to rent because they can't afford to buy. If you can't afford to buy because of foreign investors, what are your choices? rent or get a nice cozy carboard box.

You don't have to look further than SSP to see the other reason, the destruction of affordable rentals for luxury units. Even in situations where replacement rentals must be built, the units are smaller and more expensive.

If you really want to try and prove your point, let's stop approving strata title buildings and allow only rentals to be built. Right now building commoditized investment units is sucking up too much of the land and capital.

[Jebby]

Originally Posted by Vin

*Make house sellers not to sell at such a high price but instead lower their sales value for the poor "priced-out" locals.

This has to be one of the dumbest ideas I've ever read. Unless you're being sarcastic...

[Pinion]

Originally Posted by Vin

Again lashing out at certain foreigners without first looking in the mirror. If you really want change,

*Make politicians be more picky about who to let into this country.
*Make house sellers not to sell at such a high price but instead lower their sales value for the poor "priced-out" locals.
*Make local developers not to build for those foreigners.
*Boot out rich Americans and others that had also been contributing to the competition and housing price increases here.

That is literally what we're asking for. Your second point is accomplished by better immigration standards and a ban on foreign ownership.

Your fourth point is laughable but also covered by banning foreign ownership.

Oh and no one is lashing out at any ethnicity so cool it with the strawmen racism accusations.

[logan5]

Originally Posted by whatnext

Seriously? You're missing the very obvious data point, which was pointed out by the latest Statscan release. More Canadian are having to rent because they can't afford to buy. If you can't afford to buy because of foreign investors, what are your choices? rent or get a nice cozy carboard box.

You don't have to look further than SSP to see the other reason, the destruction of affordable rentals for luxury units. Even in situations where replacement rentals must be built, the units are smaller and more expensive.

If you really want to try and prove your point, let's stop approving strata title buildings and allow only rentals to be built. Right now building commoditized investment units is sucking up too much of the land and capital.

To summarize your statements - low supply/high demand = rents that are detached from the local economy. That's basically what I said. And it's important to note that it's locals that are competing for rental units, and it's locals that have driven up rental rates that are detached from the local economy. What!? You also seem to be suggesting we can build our way to affordability.

[szechuansean]

Originally Posted by Vin

look in the mirror.

Billant observation. But what he's saying is true and you try to bash him for it.

[retro_orange]

On CBC Vancouver this evening Andrew Weaver did a very candid interview on what he believes must be done with our real estate problem before it gets too far out of hand where drastic measures must be taken.

The foreign buyers tax is simply another cost of doing business, no different from the type of price increases we see within just a few months here. The free market is reaming BC throughout. Cheap labour can't travel from Alberta to serve tables or clean hotel rooms in Vancouver.

In September our real estate:
5% of Vancouver's went to foreign nationals
burnaby 10%
Richmond 11%
Victoria 5.1%

He gave an example of a realtor in the interior who informed the Green party because he was contacted by a Hong Kong based company who wanted to purchase 35,000 acres of farmland for holding purposes.

"What matters or not is if you use our real estate to dump capital"
Andrew Weaver

Link to video, skip to 29:12
http://www.cbc.ca/player/play/1086674499762/

[Cypherus]

Originally Posted by logan5

To summarize your statements - low supply/high demand = rents that are detached from the local economy. That's basically what I said. And it's important to note that it's locals that are competing for rental units, and it's locals that have driven up rental rates that are detached from the local economy. What!? You also seem to be suggesting we can build our way to affordability.

Locals are driving up rental rates for what is now considered the last remaining bastion of affordable rental properties in the city after the system has been shocked with foreign capital and money laundering for years. Locals have been priced out of rental properties that used to be had for acceptable and affordable rates, now competing for those properties and explaining the simple supply/demand curve you cite as the reason. The suggestion on the other that locals have been responsible for driving up rental rates exclusively is flippant and shortsighted.

[whatnext]

Originally Posted by logan5

To summarize your statements - low supply/high demand = rents that are detached from the local economy. That's basically what I said. And it's important to note that it's locals that are competing for rental units, and it's locals that have driven up rental rates that are detached from the local economy. What!? You also seem to be suggesting we can build our way to affordability.

I think we're talking at cross purposes. Locals are renting because they have been priced out of market to buy. Do you disagree with that?

[whatnext]

Originally Posted by retro_orange

On CBC Vancouver this evening Andrew Weaver did a very candid interview on what he believes must be done with our real estate problem before it gets too far out of hand where drastic measures must be taken.

The foreign buyers tax is simply another cost of doing business, no different from the type of price increases we see within just a few months here. The free market is reaming BC throughout. Cheap labour can't travel from Alberta to serve tables or clean hotel rooms in Vancouver.

In September our real estate:
5% of Vancouver's went to foreign nationals
burnaby 10%
Richmond 11%
Victoria 5.1%

He gave an example of a realtor in the interior who informed the Green party because he was contacted by a Hong Kong based company who wanted to purchase 35,000 acres of farmland for holding purposes.

"What matters or not is if you use our real estate to dump capital"
Andrew Weaver

Link to video, skip to 29:12
http://www.cbc.ca/player/play/1086674499762/

Bring it on! Hopefully he had words with his MLA Adam Olsen who spewed out the typical politician prevarication in this article:
https://beta.theglobeandmail.com/real-es...806/?ref=http://www.theglobeandmail.com&

[shreddog]

Originally Posted by logan5

The links you provided show only rental rates, but not any of the other categories you mentioned. This site does though...

Numeo is always suspect, however since you provided it ...

Rent Prices in Calgary are 12.16% lower than in New Westminster

And remember, you originally said:

The cost of living in New West is actually a bit lower than in Calgary (that's including rent), ...

The link that you therefore provided shows that you are wrong.

As for the other things I listed:

And then there's food (same or cheaper in Calgary),

When I go through the Superstore flyer, I see the same deals and prices in Calgary and New West. Yes you can find cheaper deals in both places, but overall, food prices are similar (in my experience for some reason peanut butter and pop are noticeably cheaper in Calgary whereas bread is cheaper here)

Gas (much cheaper),

According to gasbuddy its 137 in New West and 101 in Calgary

insurance (way cheaper),

According to Arc, in 2014 it was 15% cheaper in Alberta than BC. As for myself, my insurance (same vehicle. same driving record, same coverage) went from $900 to $2100 when I moved from Calgary to Vancouver

clothes (same),

Check out all the national stores - same prices in Calgary and New Westminster - plus those in Calgary are not subject to 7% PST

buying a house (much cheaper),

According to Zolo
New West: 3 bdr sdh - $1.3M
Calgary: 3 bdr sdh - $470K

no provincal sales tax,

Obviously.

monthly transit passes (2/3's cheaper)

Translink - 2 zone (need to get DT) - $126
Calgary Transit full network - $101

What about municipal taxes?
According to the City of New West, if you own house valued at $1m (so less than average), you pay roughly $4800 a year in taxes. On the property I own in Calgary, I'm paying roughly $3300 a year on an inner city house with a market price of $800K.

I really like New West and have a number of friends living there. If I decide to stay in the lower mainland I may consider buying there. But under no circumstances should anyone think is cheaper, let alone comparable to the cost of living as Calgary.

[whatnext]

Young people should just get used to renting (forever):

The proportion of foreign buyers in the Vancouver region is at its highest level since the province's 15-per-cent tax on these purchasers came into effect a year ago, with experts and industry insiders saying international interest is strong in the surging condo market and the suburbs of Burnaby, Richmond and Surrey...

..Provincial government data released on Tuesday show foreign buyers accounted for 5 per cent of homes bought in Metro Vancouver in September, with Richmond and Burnaby showing the highest levels, at 10.8 per cent and 9.6 per cent respectively. In Surrey, the city in the region where the most properties changed hands, the rate of foreign buyers more than tripled from August to September – jumping from 1.7 per cent to 5.9 per cent.

B.C.'s 15-per-cent tax, Vancouver's 1-per-cent levy on empty homes and China's increasing constraints on outbound money flows will put pressure on foreign demand for these homes, but not make a major dent, he said. Mr. Scarrow said that's because of three main factors: Quebec's investor immigration program funnelling close to 1,000 Chinese families a year to Metro Vancouver; the flow of wealthy international students to the region; and the ease of travelling to a region serviced by direct flights to 10 different cities in China..(bold mine)....
https://beta.theglobeandmail.com/news/br...t-housing-tax-data-show/article36805976/

Think about that last sentence the next time someone cheers how many flights we have to China in the YVR thread.

[shreddog]

FWIW, I have no skin the real estate game in Vancouver as my time here is likely short term, however in the past 12 months I have tried to hire people into Vancouver (new tech with decent salaries).

So far I have had people from Calgary, Montreal, Rome, Boston and Frankfurt reject offers since housing was too expensive. I have hired from Calgary, Ottawa, Halifax and Toronto, but these were all recent grads who are still in rental mode.

Vancouver is at interesting cross roads. Yes there are more expensive cities to live in, but they can attract new blood for many reasons (lifestyle, salary, cool work,etc). I'm not sure I would say that Vancouver can compete with those cities yet (if ever), meaning that there could some real rude awakenings coming. Just my 2 cents.

[240glt]

^ I've had several offers over the years in Vancouver. My last company tried to get me to go down there and look after a portfolio of Class A office buildings. As tantalizing as getting out of Edmonton and living back in my home province is, I just can't reconcile the quality of life change. Moving to Vancouver means giving up too much unfortunately, and the biggie for us is how much further behind we'd be financially. At the rate we're going now we'll be able to semi-retire in 7 years. We'd probably have to spend close to a million to get what we want in Vancouver, and while doable means we're taking on a whole lot of debt later on in our working careers. Or renting a shoebox.

[whatnext]

Originally Posted by shreddog

FWIW, I have no skin the real estate game in Vancouver as my time here is likely short term, however in the past 12 months I have tried to hire people into Vancouver (new tech with decent salaries).

So far I have had people from Calgary, Montreal, Rome, Boston and Frankfurt reject offers since housing was too expensive. I have hired from Calgary, Ottawa, Halifax and Toronto, but these were all recent grads who are still in rental mode.

Vancouver is at interesting cross roads. Yes there are more expensive cities to live in, but they can attract new blood for many reasons (lifestyle, salary, cool work,etc). I'm not sure I would say that Vancouver can compete with those cities yet (if ever), meaning that there could some real rude awakenings coming. Just my 2 cents.

Out of curiosity, if you're able to share, would the salary offered for Vancouver been competitive with salaries in the US?

[Vin]

Originally Posted by szechuansean

Billant observation. But what he's saying is true and you try to bash him for it.

I speak up against someone who calls an entire ethnic group of people "locusts". If you are from there, I'm sure he will also label you a "locust".
So you do agree with him that people from China are "locusts"? So how do you label people from, say, Somalia or Egypt?

Originally Posted by Pinion

A:That is literally what we're asking for. Your second point is accomplished by better immigration standards and a ban on foreign ownership.

Your fourth point is laughable but also covered by banning foreign ownership.

Oh and B:no one is lashing out at any ethnicity so cool it with the strawmen racism accusations.

A: Is that really what you are asking for: blaming the local landlords and decision makers that created this crisis in the first place? I never heard whatnext say much about those points except ethnic bashing and "locust"-labelling, and ONLY posting news regarding how the people of that ethnic background tend to screw the system. Yourself, I remember clearly that you also stated that you hated "their culture". If this is not stark racism, I don't know what it is. Leave this multiethnic and multi-cultural city if you must, and I don't think you will be missed.

B: *Facepalm* Trump and his henchmen say the same thing over and over again too. But we all know what he is.


Remember this thread??!
Chinese Investors Driving Up Metro Housing Prices
http://forum.skyscraperpage.com/showthread.php?t=189105&highlight=chinese

I pointed out its obvious intention: to create hatred. People stopped using it but now I guess the same people have migrated to one that is more "politically correct", albeit with words like "locusts" being used.

[whatnext]

Originally Posted by Vin

I speak up against someone who calls an entire ethnic group of people "locusts". If you are from there, I'm sure he will also label you a "locust".
So you do agree with him that people from China are "locusts"? So how do you label people from, say, Somalia or Egypt?
.

Gee, it's funny that you equate all Chinese people with offshore investors.

Offshore investors who snap up local real estate are locusts. They devour affordability leaving nothing behind for those who live here. No apology from me in using that term.

[mezzanine]

Originally Posted by shreddog

Vancouver is at interesting cross roads. Yes there are more expensive cities to live in, but they can attract new blood for many reasons (lifestyle, salary, cool work,etc). I'm not sure I would say that Vancouver can compete with those cities yet (if ever), meaning that there could some real rude awakenings coming. Just my 2 cents.

I agree with this. I also think that capital outflows from china play a role, especially as china's economy and population is quite big. But the size of that role versus other factors are a consideration, as is how to address them.

Banning foreign ownership outright would be a big lever to pull, so they should make sure they account for unintended consequences. Similar laws as written in other jurisdictions are not hard to avoid and do little to prevent foreign ownership.

I don't have any easy answers, but I suspect a luxury tax may be politically expedient as it gets the fat cats. IMO a large expansion of government-owned housing like in Europe may also play a role. TBH, a massive expansion of transit infrastructure would also fit as it would make it possible to own a house in farther suburbs and commute to jobs in the centre, increasing choice for workers and newcomers.

One would also have to ask themselves if people are ok with more government restrictions on what you can do with your private property. it's be interesting to see what happens with the empty property tax in the CoV, but I suspect it is having little effect so far.

and as shown from the above, yes, you can address the housing crisis and the influence of foreign investment without making fun of how other people drive.

[dreambrother808]

We’re forgetting the Airbnb effect as well, which also requires much heavier regulation.

[rofina]

Originally Posted by mezzanine

I agree with this. I also think that capital outflows from china play a role, especially as china's economy and population is quite big. But the size of that role versus other factors are a consideration, as is how to address them.

Banning foreign ownership outright would be a big lever to pull, so they should make sure they account for unintended consequences. Similar laws as written in other jurisdictions are not hard to avoid and do little to prevent foreign ownership.

I don't have any easy answers, but I suspect a luxury tax may be politically expedient as it gets the fat cats. IMO a large expansion of government-owned housing like in Europe may also play a role. TBH, a massive expansion of transit infrastructure would also fit as it would make it possible to own a house in farther suburbs and commute to jobs in the centre, increasing choice for workers and newcomers.

One would also have to ask themselves if people are ok with more government restrictions on what you can do with your private property. it's be interesting to see what happens with the empty property tax in the CoV, but I suspect it is having little effect so far.

and as shown from the above, yes, you can address the housing crisis and the influence of foreign investment without making fun of how other people drive.

The issue is that people are conflating action on this file with racism. That's ridiculous.

Second - ask the Chinese community what they think of the money flowing here? They left their home country because of the type of people that are now depositing their funds here.

Third - the electorate has allowed the politicians to privatize all the positives and socialize the negatives. Some of this is on us, but like is the case generally in the West, we are very poorly educated on the nuances of the issues our society faces.

The solution is not as difficult as we are lead to believe;
- bring this money to light
- encourage it
- tax it
- create a secondary class of housing stock for local income earners, verified by tax returns
- this secondary housing stock be built non-profit, and its appreciation linked to inflation going forward
- eliminate any ability for a foreign company, persons, or money to buy farmland

That's it, done.

This accomplishes all things, we on the forum would continue to enjoy the gorgeous towers being built by foreign money, while locals can buy housing in a non speculative housing stock.

If they have money and want to participate in the regular market, great. Take the risk, if it crashes, tough luck, if it doubles, congrats.

At the least this doesn't impact us in every possible negative way, as it is doing now, without distributing any of the positives beyond keeping us on the forum busy with neat new projects to gawk at.