June 1, 2015

Bob Rennie’s “19 Influencers on High Housing Costs”

Novae Res Urbis covered the talk Bob Rennie gave to the Urban Development Institute in which he supported a ‘speculation tax.’  But more helpfully, they listed what Rennie called …

The 19 Influencers on High Housing Costs
  • Zero or limited ability to create single-family housing stock
  • Record high land costs in the region
  • Rising construction costs
  • Upset neighbourhood and community groups who need to be informed on population growth and pressures on the city
  • Consumer expectations
  • The million-dollar single-family home “on the verge of extinction”
  • Aging population with billions in equity to spend
  • Foreign ownership
  • Zoning enacted in isolation of today’s population
  • An insular society
  • Very few head offices
  • We still keep using the word “white”
  • A higher-tax, fewer-services creep
  • A nameless, faceless blogsphere with opinions in isolation of facts
  • The courtroom being used to fight politics and density
  • Population increases
  • An ever-increasing transfer of wealth
  • A cultural shift of wanting to live where everybody else lives
  • Less reliance on the car



“There’s just too many forces working against affordability right now,” he said, adding that the city is past using “baby steps” as a solution and that transit-oriented development “shouldn’t even be a discussion.”

He has also suggested that Canada Mortgage and Housing Corp. as a stakeholder “start attending the anti-density, not-in-my-backyard meetings and explained the consequences of no supply” and other pressures on affordability.

“If we do not allow density, we’re effectively telling our millennials, families and seniors that they have to move out of the city,” he said.


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Worth bringing forward.

John Graham does the numbers:

  • Number of single family dwellings in the Greater Vancouver area: 949,565
  • Average sale price of a single family dwelling in April 2015: $1,406,426
  • Implied value of all single family dwellings: $1,335,492,904,690. ($1.34 trillion)
  • Number of people per single family dwelling: 2.6
  • Number of people whose assets decrease if property value is reduced by new taxation to increase affordability: 2,468,869
  • Number of votes at affordable housing rally: 400
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Was the affordable housing rally a tipping point?

 Click to enlarge 


It has a broad and evident appeal:


It has a hashtag – #donthave1million – and leadership:

Eveline Xia, organizer of last Sunday’s rally


It has a demand:


It has media coverage:


It has a storyline: #donthave1million rally draws hundreds to downtown Vancouver

Xia said she’s glad to see politicians recently discussing affordability solutions openly, which she believes is a response to public pressure.

“The horse is out of the barn now. The provincial and municipal governments are on defence and that’s a good thing,” Xia said. “They realize that there’s no more running with the status quo.”


But is it enough?

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A column that only Ian Young could write:


The realisation that something is grotesquely awry with Vancouver’s housing market has reached a tipping point.

Fuelled by the special sauce of Chinese wealth – and good old Fear of Missing Out – prices have decoupled from the local economy, with an average detached price of about C$1.4 million (HK$8.9 million). So far, so normal for Vancouver.

But the past couple of months have witnessed a kind of awakening. …

Foreign money might be a factor, concede some, but it must similarly influence other markets, right? Not really – since immigration data demonstrates that the influx of rich immigrants to Vancouver (80 per cent of them Chinese) is unmatched by any other city in the world, at least in terms of wealth-migration schemes that clearly define asset benchmarks.

Others seek to frame unaffordability as inevitable, since Vancouver is a city of limited land supply. But plenty of other cities are in the same boat: New York and Singapore spring to mind. Both are expensive cities, but Vancouver has left them in the dust in terms of unaffordability. …

Surely Vancouver has always been unaffordable? A quick check of the stats will show that as recently at 10 years ago, Vancouver’s price/income ratio was in dancing territory, at 5.3.

As for the perennial low-rates argument, pretty much everywhere has low rates. It tells us nothing about what makes Vancouver’s market special.

An exceptional cause must be found for an exceptional situation, and for Vancouver, that can be found quite easily in wealth migration, which exploded in the past decade.

Vancouverites still struggle to grasp the scale of this influx to their modestly-sized city. From 2005-2012, about 45,000 millionaire migrants arrived in Vancouver under just two wealth-determined schemes, the now-defunct Immigrant Investor Programme and the still-running Quebec Immigrant Investor Programme. Let’s put that in perspective. The entire United States only accepted 9,450 wealth migration applications in the same period under its famous EB-5 scheme, likely representing fewer than 30,000 individuals.

So, Vancouver has recently received more wealth-determined migration than any other city in the world, by a long stretch. This, in a city with some of the lowest incomes in Canada. …

Foreign buyers probably aren’t to blame for Vancouver’s unaffordability. But foreign money probably is. And cracking down on the foreignness of funds will prove much harder than dealing with the foreignness of buyers, even if the will to do so exists. …

Another factor often neglected is that a successful “fix” for unaffordability would crush a great many people, probably as many as it helps. In peril would be a real estate and development industry that employs thousands. Anyone who already owns a home would also be at risk. Thousands of elders banking on their homes as a retirement nest egg. Thousands of recent buyers facing the terrifying prospect of negative equity, with mortgages far exceeding the value of their homes.

It’s no surprise the politicians are treading carefully. …

Wherever you stand on the matter, the time for denialism is over. At the very least, Vancouver deserves its long-overdue debate about the root causes of the unaffordability crisis, and what to do about it.


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