Record housing construction in Seattle tanks rent increases.

[Migrant_Coconut]

Originally Posted by misher

Regarding 4C how does someone foreign buying real estate as an investment and renting it out bad? Doesn’t this add a unit of housing to the rental market? Why would a local buying to live in it be preferable to a renter living there?
Also rennovictions happen because the only bloody way to raise rents now is to evict and re-rent. Your telling landlords to take a loss or evict and of course there evicting. Shelter like food and water is a basic need but also like food and water it is earned instead of given. Why are we giving people homes as good as or better than the ones we worked for in places we can’t afford to live?

If you mean a landlord overseas renting out legally, that's a highly unconventional setup (are there any examples you know of?) but no problem so long as they're paying taxes. The intended targets are Airbnbs (scams, tax evasion, detriments to Vancouver's hotel industry) and empty units (used as shares or tax exemptions rather than homes).

Rents can be increased by 2% a year - or if the NDP changes it, at the pace of inflation with an option to dispute. Landlords are perfectly capable of increasing rents.

I can sympathize with those who're genuinely struggling to make ends meet at those rates, but what's happening just as often is that tenants are being kicked out for no other reason than greed. Want more for the unit, just turn a simple plumbing job or repainting into an eviction, put it back on the market for another $700-1,000/month. That's not right either.

[misher]

Originally Posted by Migrant_Coconut

If you mean a landlord overseas renting out legally, that's a highly unconventional setup (are there any examples you know of?) but no problem so long as they're paying taxes. The intended targets are Airbnbs (scams, tax evasion, detriments to Vancouver's hotel industry) and empty units (used as shares or tax exemptions rather than homes).

Rents can be increased by 2% a year - or if the NDP changes it, at the pace of inflation with an option to dispute. Landlords are perfectly capable of increasing rents.

I can sympathize with those who're genuinely struggling to make ends meet at those rates, but what's happening just as often is that tenants are being kicked out for no other reason than greed. Want more for the unit, just turn a simple plumbing job or repainting into an eviction, put it back on the market for another $700-1,000/month. That's not right either.

Your confusing want more with wanting market rates. It’s not like you can jack up a market rental 700-1000 and someone else will come. What happens is you have units where the owner never bothered to raise rent or forgot and suddenly the rent is a lot less than market and the tenant is getting a great deal. How do you raise the rent once this situation happens? Under the old system you could at least raise it slowly but now your forced to rennovict. Right now in vancouver rents are way under what the cost of housing is, you should be getting around 6-7% return because you have to pay maintenance management etc and you need to make as more interest than the bank. Instead people are getting 2-3% which is awful. Owners are already suffering at market rates and were saying this is too high you should take a bigger loss. People forget that owners pay 300-500 towards the strata each month plus rental management plus paying for the damage/screwups of the tenant. It adds up so profit margins are low or non existent. Before people would buy rentals because the housing market goes up to repay it but now the markets going down and rent just doesn’t make sense.

[whatnext]

Originally Posted by misher

Your confusing want more with wanting market rates. It’s not like you can jack up a market rental 700-1000 and someone else will come. What happens is you have units where the owner never bothered to raise rent or forgot and suddenly the rent is a lot less than market and the tenant is getting a great deal. How do you raise the rent once this situation happens? Under the old system you could at least raise it slowly but now your forced to rennovict. Right now in vancouver rents are way under what the cost of housing is, you should be getting around 6-7% return because you have to pay maintenance management etc and you need to make as more interest than the bank. Instead people are getting 2-3% which is awful. Owners are already suffering at market rates and were saying this is too high you should take a bigger loss. People forget that owners pay 300-500 towards the strata each month plus rental management plus paying for the damage/screwups of the tenant. It adds up so profit margins are low or non existent. Before people would buy rentals because the housing market goes up to repay it but now the markets going down and rent just doesn’t make sense.

Which is why renting should be left to professional companies and not to some wannabe land baron with a couple crappy condos he's trying to cover the mortgage on. Professionals don't "forget" to raise the rent. Just take a look at the title of this thread, Seattle doesn't have legions of speculators flipping condos who might rent one out if the market is slow.

[misher]

Originally Posted by whatnext

Which is why renting should be left to professional companies and not to some wannabe land baron with a couple crappy condos he's trying to cover the mortgage on. Professionals don't "forget" to raise the rent. Just take a look at the title of this thread, Seattle doesn't have legions of speculators flipping condos who might rent one out if the market is slow.

Rental managers aren't cheap though. And they do make mistakes all the time. Even at their best they hate dealing with shitty/crap tenants and will make mistakes. Even if they do things perfectly the judge/arbitrator/mediator/etc will find fault. Its very very rare that a renter will lose in court.

https://www.recbc.ca/2018/04/linda-l...y-ltd-quesnel/
https://www.recbc.ca/2017/09/lorraine-susan-fugle/
https://www.recbc.ca/2017/01/kevin-j...tions-kelowna/

And tbh I think everyone is a speculator, almost everyone will sell at the right price. This might be my business degree talking but its just wrong in a capitalist country to label one group as bad for enjoying a profit. Gives me shivers like you just insulted my core beliefs/religion when people say people who buy/sell to make money are bad. We should be encouraging entrepreneurial spirit, the market, the economy, business, investment, etc. not stifling it. I remember when banks, corporations, and lawyers used to be the evil ones.

[CanSpice]

Originally Posted by misher

What happens is you have units where the owner never bothered to raise rent or forgot and suddenly the rent is a lot less than market and the tenant is getting a great deal. How do you raise the rent once this situation happens?

Why should we bail out landlords who are inattentive in how they operate their business? Can I get bailed out when I don't save enough money and all of a sudden I need a new roof?

This really is a case of too bad so sad.

[Migrant_Coconut]

Originally Posted by misher

Rental managers aren't cheap though. And they do make mistakes all the time. Even at their best they hate dealing with shitty/crap tenants and will make mistakes. Even if they do things perfectly the judge/arbitrator/mediator/etc will find fault. Its very very rare that a renter will lose in court.

Yet landlords take their cases to court much more than tenants do (link).

Originally Posted by CanSpice

Why should we bail out landlords who are inattentive in how they operate their business? Can I get bailed out when I don't save enough money and all of a sudden I need a new roof?

This really is a case of too bad so sad.

Agreed. I'm really going to need to see some actual examples for misher's "no raises for years" scenario; even the kindest, cheapest owners always raise rents. Again, profiting good, profiteering bad.

AFAIK, it's the same thing as the ex-Shabusen on South Granville - rents went up, the restaurant left, a few months later the place was back on the market at the original price. I'm not seeing anything except a hyperinflated market and 99% occupancy rate allowing less scrupulous landlords to charge whatever they can get away with, knowing that somebody who's been crowded out of the condo market will buy regardless.

[misher]

Originally Posted by CanSpice

Why should we bail out landlords who are inattentive in how they operate their business? Can I get bailed out when I don't save enough money and all of a sudden I need a new roof?

This really is a case of too bad so sad.

Parents were old, sick, etc is common. Your treating landlords like nameless companies when they are people too.

Uhhh and going by your argument should the landlord pay because the tenant can’t pay market rent? I don’t see how the no bailout argument defends renters at all. Rent control is a bailout! In the end owners aren’t charging more than market so profit margins are slim to non existent and yet we’re hounding them for more. The money has to come from somewhere and why should the owner suffer instead of the renter who can just move. If we keep saying it’s owner this owner that then no one will rent anymore. I am very sure with the recent rental restriction that banks are making it much harder to finance rental projects.

[GenWhy?]

Originally Posted by misher

I am very sure with the recent rental restriction that banks are making it much harder to finance rental projects.

Based on? …

[misher]

Originally Posted by GenWhy?

Based on? …

Much like the depreciation report requirements we're going to have to see how banks react. The below comes from LandlordBC. I note a ton of forum posters tend to reply saying its a biased source. But please remember that its developers that build and Owners who rent so their opinions are important to increasing housing.

David Hutniak, CEO of LandlordBC, previously expressed consternation that a housing task force struck by the government, which eliminated 2% from annual rent increases, might tie rent control to units rather than to tenants like it currently does.

“Moving to a basis whereby rent control would be tied to the unit versus the tenant would be catastrophic,” he said. “That would put the nail in the coffin for the ability of landlords to continue investing in their properties and provide safe and secure rental housing. Why would anybody build purpose-built rentals anymore? Ultimately, we can only charge based on what local incomes can support, so there’s a bit of a misperception that it’s some big cash grab—it’s not.”

The 12,000 units Goodman fears are compromised have either been approved for construction or are in the permitting process, and he says there are waning incentives for developers to build purpose-built in lieu of vastly more profitable condos.

“They must be saying, ‘Maybe we’d be better off building condos or mothballing projects because we’re not even going to see a 10% return over three or four years.’ They need 10-15% just to get bank financing. We’re concerned banks will grow increasingly leery about funding new rental projects, which up until now were low risk.”

Supply remains at the heart of the issue, he added, because government ultimately determines what can and cannot be built.

“The government is saying ‘We want you to risk your money but we’re going to cap your rent increases to less than market,’” said Goodman. “Landlords are now being singled out as the culprits, but it’s really the federal, provincial and municipal governments, not just in B.C. but across the country, that have been guilty of not supporting new rentals.”

Developers, claims Goodman, have returned to their drawing boards to determine whether or purpose-built rental buildings remain viable ventures.

“We have all these forces at work right now and we know from talking to a number of developers over the past week that this is not just hearsay,” said Goodman. “They’re all going back to the drawing boards and looking at their projects to see if they really want to build rental buildings.

https://www.canadianrealestatemagazi...ts-248935.aspx


Honestly we're seeing that decreasing prices, increasing government taxes/intervention/rules, increased regulation, etc. are causing developers to cancel or leave when combined with the mortgage rules and interest rate increases at a time that we need more housing to be built. Housing starts have dropped across Canada 23%, likely due to mortgage rules. However, BC leads this at 43.3%, likely due to the triple whammy of mortgage rules+taxes+legislation which is insanely bad for our economy and housing supply. We've screwed people [real estate businesses, developers, Owners, etc.] too much and now they've lost trust in BC as a place to do business.

The decline was led by steep drops in British Columbia and Alberta, where home construction starts have dropped by 43.3 per cent and 34.8 per cent,

https://www.huffingtonpost.ca/2018/1...th_a_23555468/

A 40%+ drop in our biggest industry in sales and development is frightening. We're heading towards a depression while people cheer it on as if a 10% decrease in housing prices will make a difference.

[whatnext]

Originally Posted by misher

...Honestly we're seeing that decreasing prices, increasing government taxes/intervention/rules, increased regulation, etc. are causing developers to cancel or leave when combined with the mortgage rules and interest rate increases at a time that we need more housing to be built. Housing starts have dropped 43.3% which is insanely bad for our economy and housing supply.

https://www.huffingtonpost.ca/2018/1...th_a_23555468/

Oh for God's sake, if housing starts have dropped it's because the market is telling builders demand isn't there. Look at the graph in this article to see how months of inventory is swelling. We don't need more supply, if anything is needed it is for sellers to get realistic about the price they can get. You seem to think the prices in the bubble were some sort of "normal" we should be hoping to reinflate.

[misher]

Originally Posted by whatnext

Oh for God's sake, if housing starts have dropped it's because the market is telling builders demand isn't there. Look at the graph in this article to see how months of inventory is swelling. We don't need more supply, if anything is needed it is for sellers to get realistic about the price they can get. You seem to think the prices in the bubble were some sort of "normal" we should be hoping to reinflate.

And you seem to think there’s some large supply of empty homes that will magically become availible if prices drop. If all homes are full how does cheaper prices help any? As for what’s normal I assume Vancouver housing should be worth slightly more than Toronto because our weather is better and going by prices this is exactly what happens. Construction was already barely pacing population growth and if it slows down any we will be facing a crisis that will push prices up more.

Look around and tell me how many more people we can house with less than 1% vacancy if prices go down. How will lower prices help a huge load of people fit into the 1%? Will we shove them in via bulldozer?

Think about it and tell me how lower prices will help get more people into homes that have people in them already. Tell me how lower prices are going to solve our future problems as construction goes down 40% but our population still grows at 0.5% a year. Tell me how lower prices are going to help the massive layoffs in the construction industry. Tell me how lower prices is going to solve the huge hit to the economy and taxes in the budget. Tell me how we’re going to house the labor we desperately need in the less than 1% vacancy that will lower even more as new construction dies, as rental owners+developers+investors run away from a hostile business environment. As demand goes crazy because we didn’t build new housing and chased away everyone that wanted to.





You obviously have thought through everything and have a very smart master plan/strategy for how we will overcome everything. So tell me.

[Changing City]

Originally Posted by misher

Honestly we're seeing that decreasing prices, increasing government taxes/intervention/rules, increased regulation, etc. are causing developers to cancel or leave when combined with the mortgage rules and interest rate increases at a time that we need more housing to be built. Housing starts have dropped across Canada 23%, likely due to mortgage rules. However, BC leads this at 43.3%, likely due to the triple whammy of mortgage rules+taxes+legislation which is insanely bad for our economy and housing supply. We've screwed people [real estate businesses, developers, Owners, etc.] too much and now they've lost trust in BC as a place to do business.

https://www.huffingtonpost.ca/2018/1...th_a_23555468/
.

We're not seeing a drop in Housing Starts. There's actually an increase.
As the article you cite notes, there's a huge variation from month to month, and a change from one month to another is pretty much meaningless. The article is also talking about BC data, not Vancouver data.

If you get the latest data from CMHC's 'Housing Now', from September for Vancouver, you'll see that year-to-date (so in 8 months of 2018) there have been 16,813 housing starts in Metro Vancouver, 361 more than the first 8 months of 2017. To put that in context, 2017 saw more housing starts than any of the previous 10 years - and so far this year we're building more than last year.

There were 43,684 units under construction in August, which is 3,510 more than were under construction in August 2017.

And if it's the City of Vancouver, rather than Metro Vancouver that you're concerned about, then it's worth noting that there have been 4,848 starts so far this year, compared to 1,838 in the first 8 months of last year, and more than any other municipality - more than double the starts in Surrey (2,332) and nearly triple the starts in Burnaby (1,754) or Richmond (1,702).

As this thread was initially about rental units, it's worth noting that those are up a lot as well; there have been 4,464 rental units started in Metro Vancouver this year, compared to 2,928 this time last year. Over half those are being built in the City of Vancouver - 2,501 units (compared to 1,210 in the first 8 months of 2017).

So the sky isn't falling (yet), and the new construction hasn't slowed down at all.

[misher]

Originally Posted by Changing City

We're not seeing a drop in Housing Starts. There's actually an increase.
As the article you cite notes, there's a huge variation from month to month, and a change from one month to another is pretty much meaningless. The article is also talking about BC data, not Vancouver data.

If you get the latest data from CMHC's 'Housing Now', from September for Vancouver, you'll see that year-to-date (so in 8 months of 2018) there have been 16,813 housing starts in Metro Vancouver, 361 more than the first 8 months of 2017. To put that in context, 2017 saw more housing starts than any of the previous 10 years - and so far this year we're building more than last year.

There were 43,684 units under construction in August, which is 3,510 more than were under construction in August 2017.

And if it's the City of Vancouver, rather than Metro Vancouver that you're concerned about, then it's worth noting that there have been 4,848 starts so far this year, compared to 1,838 in the first 8 months of last year, and more than any other municipality - more than double the starts in Surrey (2,332) and nearly triple the starts in Burnaby (1,754) or Richmond (1,702).

As this thread was initially about rental units, it's worth noting that those are up a lot as well; there have been 4,464 rental units started in Metro Vancouver this year, compared to 2,928 this time last year. Over half those are being built in the City of Vancouver - 2,501 units (compared to 1,210 in the first 8 months of 2017).

So the sky isn't falling (yet), and the new construction hasn't slowed down at all.

Haha honestly I kind of knew that number wasn’t very accurate. But I wanted to see his answer since he seemed to be totally happy with it. And you must admit with rising taxes a real estate slowdown higher mortgage rates increasing laws were not exactly encouraging development and I wouldn’t be surprised if it dropped. I really want to see his answer about how lower prices help when we have less than 1% vacancy.

[retro_orange]

Originally Posted by misher

Haha honestly I kind of knew that number wasn’t very accurate. But I wanted to see his answer since he seemed to be totally happy with it. And you must admit with rising taxes a real estate slowdown higher mortgage rates increasing laws were not exactly encouraging development and I wouldn’t be surprised if it dropped. I really want to see his answer about how lower prices help when we have less than 1% vacancy.

That is no way to make a valid argument or earn respect from anyone.

[whatnext]

Originally Posted by misher

Haha honestly I kind of knew that number wasn’t very accurate. But I wanted to see his answer since he seemed to be totally happy with it. And you must admit with rising taxes a real estate slowdown higher mortgage rates increasing laws were not exactly encouraging development and I wouldn’t be surprised if it dropped. I really want to see his answer about how lower prices help when we have less than 1% vacancy.

So yet another instance where you fling poo against the wall to see if it sticks.

There’s no supply problem. Did you even look at the graph in the article I linked showing months of condo inventory climbing? Didn’t think so.

[misher]

Originally Posted by whatnext

So yet another instance where you fling poo against the wall to see if it sticks.

There’s no supply problem. Did you even look at the graph in the article I linked showing months of condo inventory climbing? Didn’t think so.

You mean with a vacancy rate of less than 1% we don’t have a supply problem?

Vancouver, like several other cities in British Columbia, has a vacancy rate of less than one per cent.

https://www.cbc.ca/news/canada/briti...tals-1.4723908

Lower prices are definitely going to help us house people in non existent housing. Your a genius man.

[Changing City]

Originally Posted by misher

You mean with a vacancy rate of less than 1% we don’t have a supply problem? https://www.cbc.ca/news/canada/briti...tals-1.4723908

Lower prices are definitely going to help us house people in non existent housing. Your a genius man.

The vacancy rate of under 1% is in purpose-built rental units. The number under construction is more than for many, many years, and combined with restrictions on Airbnb and taxes designed to discourage people leaving houses or apartments empty, rather than renting them, rental supply should increase. If people continue to arrive in the region, we probably need even more rental housing, but a number of would-be politicians in several municipalities seem to be indicating their intention, if elected, to adopt policies like rental-only zoning, which might help increase supply. There are also candidates suggesting they would allow neighbourhoods to have a greater role deciding what developments can go ahead, and that would probably reduce the potential supply. So the election outcomes across the region will influence how much rental gets built, and where, in the next few years.

In the meantime across the region we are also building a lot of condos, and some townhouses, at close to record levels, even though home prices for existing houses have dropped for the past 3 months. There's no sign yet that falling prices have limited new proposals for development, and new schemes are still being launched and sold in sufficient numbers to allow them to proceed. That may change if interest rates continue to rise, and may cause some projects to be developed over a longer time frame.

The changed ability of potential buyers to raise funds (with the stress test on mortgages, and higher mortgage rates), is the most likely explanation for falling prices. Once prices start falling, potential buyers are less likely to jump into the market, so inventory increases and sale prices tend to fall even more. Eventually that stops, either because interest rates stop going up or enough new buyers come into the market to stabilize prices.

Once prices start falling, there's no way of telling how far they'll fall, or for how long. This could be it - they'll go up again next month, and there will be a little 'blip' on the house price chart. That seems unlikely, as interest rates look likely to be raised at least once more this year, and again next year. What happens to the US economy, and their interest rates will be a significant influence on those future rate decisions, and nobody knows how that scenario will play out.

[GenWhy?]

As a note, take The Goodman Report with a grain of salt. I mean, we're in development in rentals and condos and even I find Goodman to be over exaggerating and too specific in his examples of what is "hot" right now or where things are falling. Goodman doesn't talk highly of rentals for regular people ( households under $80k) and talks a big game about where market rents are right now and gets excited about tearing down rental buildings that are older to build more rental that is slightly taller and charges a much higher rent.

The developers that he cites as "going back to the drawing board" are those that bough expensive land recently, based profits off a %4 rental increase instead of a safe %2 which we do, and are trying to build on a DP not a rezoning, or have poorly chosen land and can't get much of a density lift. Rental is going strong because the demand is there and the programs are there, we just need a few more tools. The MIRHP Program is one of those tools that hopefully is embraced as a firm program under the new government.

There is also a new parking by-law for much of the city Core, and it's to be revised again with the new council to expand to most of the city. Parking minimum changes were a great factor in the rental expansion in Seattle.

[whatnext]

Originally Posted by misher

You mean with a vacancy rate of less than 1% we don’t have a supply problem? https://www.cbc.ca/news/canada/briti...tals-1.4723908

Lower prices are definitely going to help us house people in non existent housing. Your a genius man.

Both Changing City and GenWhy? have you given you detailed responses as to the flaws in your argument.

The issue boils down to the fact Vancouver spent far too much time and energy building condos when they should have been building apartments as per Seattle. Rather than appeal to the small time condo landlord/investor, governments should have been encouraging bigger players to develop purpose-built rentals. Given the way you keep flogging this dead horse, there's obviously something colouring your biases you haven't disclosed.

[Vin]

Originally Posted by whatnext

Seattle never built as many condos as Vancouver did, what you’re seeing in their rental market is what you’re about to see in our condo market. An overshoot in building followed by a price collapse.

I also found this interesting: Seattle housing market under pressure as Chinese buying dries up
https://www.google.ca/amp/s/www.cnbc...-dries-up.html

Considering the number of people moving here, Vancouver is definitely not building enough, contrary to what most may want to believe.

If Vancouver is building enough residential units, Surrey, Burnaby, New West, Richmond, Coquitlam and other outlying municipalities will never ever experience the boom they are experiencing right now.