Downtown Los Angeles hasn't seen this much construction since the 1920s

[Centropolis]

i regret not checking out downtown los angeles last time i was there. the westside kind of sucks you in. i mean, i certainly saw downtown in the distance.

[lio45]

Originally Posted by ChargerCarl

Vancouvers rents aren't all that high though. Less than the bay area or LA.

Exactly, and that's a dead giveaway that the demand for real estate for speculating/investment purposes is quite disconnected from the demand for real estate for housing purposes.

[dc_denizen]

Originally Posted by ChargerCarl

Also the problem that Vancouver's suffering from is similar to the one that just about every large American city is suffering: demand exceeding supply.

So why not deregulate and allow supply side to meet demand like Tokyo? In that case an increase in foreign demand --> more money for construction workers/firms/interior designers instead of higher prices for landlords.

because to meet demand, people (chinese immigants included) want single family homes, what will induce sprawl, if built.

[TexasPlaya]

Originally Posted by dc_denizen

because to meet demand, people (chinese immigants included) want single family homes, what will induce sprawl, if built.

Then don't subsidize sprawl...

[ChargerCarl]

Originally Posted by dc_denizen

because to meet demand, people (chinese immigants included) want single family homes, what will induce sprawl, if built.

So?

[ChargerCarl]

Originally Posted by lio45

Exactly, and that's a dead giveaway that the demand for real estate for speculating/investment purposes is quite disconnected from the demand for real estate for housing purposes.

That doesn't add up with a low rental vacancy rate though.

[lio45]

Originally Posted by ChargerCarl

That doesn't add up with a low rental vacancy rate though.

Not if empty units whose owners aren't actively trying to rent are not counting in the statistics. In Vancouver, the bar for deciding "meh, no need to have to deal with tenants to make real estate investing worthwhile" is pretty low - markedly lower than everywhere else.

So, it could be very possible that every good tenant seeking to rent gets to easily rent at a good price ("good" by California standards) due to supply/demand, while most of the housing stock not easily or promptly rented at those levels gets quickly dismissed from the stats because the owners aren't desperate to rent so the units get technically off the rental market.

[ChargerCarl]

That sounds unlikely.

[badrunner]

LA isn't Vancouver. All these new units won't affect the rental market in LA as a whole, they won't even affect rates down the street in Westlake or Koreatown. It's a drop in the bucket.

[lio45]

Originally Posted by ChargerCarl

That sounds unlikely.

A very common way to do real estate in Vancouver is to buy, keep it empty, and eventually sell to a sucker who's overpaying even more than you did. Cap rates are incredibly low (the market can't support rents reasonably aligned with current property prices). There are ungodly amounts of perfectly rentable units that are just off the rental market.

If any of this sounds unlikely to you, well, so be it, but that's nonetheless what happens. After all, the "unlikely" can still happen...

[ChargerCarl]

Sure but thats a different market, those units don't count towards rental vacancy in the denominator.

[lio45]

Originally Posted by ChargerCarl

Sure but thats a different market, those units don't count towards rental vacancy in the denominator.

That was my point - if owners decide very quickly that they aren't renting so they choose to take them off the market (which in Van makes decent financial sense so it's an easier decision to make - in other, more normal markets, the landlord would just persevere and continue to try renting), you can have very low rental vacancy in spite of low rents.

BTW, how do YOU explain the huge disconnect between the price of acquiring housing as an owner (housing as investment in the Van market - quite expensive), and the price of getting housing as a dweller (housing as a roof over your head in Van - quite cheap in proportion) ?

[ChargerCarl]

Large demand to buy homes to store wealth from the Chinese.

[lio45]

Originally Posted by ChargerCarl

Large demand to buy homes to store wealth from the Chinese.

!
That's EXACTLY my point.

Originally Posted by lio45

Exactly, and that's a dead giveaway that the demand for real estate for speculating/investment purposes is quite disconnected from the demand for real estate for housing purposes.

In other words: wealthy Chinese looking for a safe place to park their cash drive up property prices, but they don't drive up rents.

[ChargerCarl]

Right, that was never in doubt. What is in doubt is the negative effect on Vanouverites and how much of a problem this really is.

IMO, it's only a problem so much as we make it.

[lio45]

Originally Posted by ChargerCarl

Right, that was never in doubt. What is in doubt is the negative effect on Vanouverites and how much of a problem this really is.

IMO, it's only a problem so much as we make it.

Well, they're forced to remain renters in a much higher proportion than you'd normally expect; that's the main effect. I suppose one could easily argue it's not that much of an actual "problem". I am sure it's also been a "problem" in places like San Francisco and Manhattan for a long time already.

[ssiguy]

I did not mention Vancouver's situation as a way to hi-jack the thread. My point was simply that LA should learn from Vancouver's mistake. Usually rentals are not an issue as you can't flip them latter.

It's great to see that LA's downtown is booming and only speaks well for the city's future. It's just important to make sure the boom is a sustainable one that benefits all Angelos and not just developers. Once you commodify a city, which Vancouver has done in spades, you automatically commodify the people that live there.

[LosAngelesSportsFan]

Originally Posted by ssiguy

I did not mention Vancouver's situation as a way to hi-jack the thread. My point was simply that LA should learn from Vancouver's mistake. Usually rentals are not an issue as you can't flip them latter.

It's great to see that LA's downtown is booming and only speaks well for the city's future. It's just important to make sure the boom is a sustainable one that benefits all Angelos and not just developers. Once you commodify a city, which Vancouver has done in spades, you automatically commodify the people that live there.

Its a valid point and one that we are dealing with on a smaller scale. The demand for urban living in LA is huge and has not been met for decades. We are finally seeing the efforts bearing fruit and right now, its mostly locals and people that want to live the urban life buying and renting, but as we progress and see more ultra luxury developments, i suspect we will have to deal with the absentee owners. Another difference is that most of the Chinese buyers from china are buying SFR's in the San Gabriel valley. Its been their first choice when it came to LA. Cities like Arcadia, Temple City, East Pasadena, Monterey Park, etc have become Chinese havens.

[ChargerCarl]

Originally Posted by ssiguy

I did not mention Vancouver's situation as a way to hi-jack the thread. My point was simply that LA should learn from Vancouver's mistake. Usually rentals are not an issue as you can't flip them latter.

It's great to see that LA's downtown is booming and only speaks well for the city's future. It's just important to make sure the boom is a sustainable one that benefits all Angelos and not just developers. Once you commodify a city, which Vancouver has done in spades, you automatically commodify the people that live there.

It's an interesting point and I'm glad you brought it up. What I'm trying to discern is what exactly is the lesson we're supposed to learn from Vancouver. Many say it's that we have to find a way to curb Chinese foreign demand, but I'm skeptical. For me the problem should be approached on the supply side; regulations and zoning codes should be liberalized to accomadate any increase in demand so that the result is a large construction boom instead of long term price appreciation.

In Los Angeles the barriers to new construction are so hight that we would be suffering from a housing crisis even without any foreign demand. Complaints about "insatiable Chinese demand" largely strike me as a convenient NIMBY scapegoat to continue opposition to any new housing construction.

[dabcom]

Pictures!