Vancouver's Housing Supply Myth

[misher]

Originally Posted by Metro-One

It also doesn’t factor in when a small percentage of people buy up large quantities of the supply simply for investments, therefore not reducing the demand and instead inflates the prices far beyond their natural equilibrium.

Don't all these investment properties increase the amount of rental supply especially with the new empty home tax? I never got how owning a 2nd place thats rented out=bad. Also higher prices help drive growing construction as projects that seemed unprofitable become profitable and we can afford to pay construction workers more.

[GlassCity]

Originally Posted by misher

Don't all these investment properties increase the amount of rental supply especially with the new empty home tax? I never got how owning a 2nd place thats rented out=bad. Also higher prices help drive growing construction as projects that seemed unprofitable become profitable and we can afford to pay construction workers more.

This all sounds great in theory until you look at the practical realities of crack shacks being sold for millions.

People are finding it harder and harder to find a place to live. Clearly the status quo was not working.

[GlassCity]

Originally Posted by LeftCoaster

While I don't think housing supply is the whole problem, it certainly isn't helping things. While we are building a lot of housing, we simply aren't building enough, with 35,000 to 45,000 people moving to metro Vancouver a year we need to be building much more. last year was a record at about 26,000 starts, given that a lot of those were studios and 1 beds and we are trying to dig ourselves out of an already existing deficit, it simply isn't enough, and it's ONE of the reasons we have seen such crazy jumps in prices over the last two years.

Asking honestly since you're in the business, is it possible that with less investment demand there would be more family-oriented housing built? Since new builds would reflect actual housing demand as opposed to investment demand, which doesn't really care how the unit actually works.

I recognize that it's hard to build larger units/developments in general because of the ALR and restrictive zoning, but maybe some of the towers being built would have larger units?

[LeftCoaster]

We're already seeing average unit size increase on its own, but yes I do think that investor preference for 1bd units has driven the unit mix to a lower equilibrium.

It's more complicated than that though, as most locals prefered smaller units as well, as the typical move was to live in a smaller unit then grow out of it and move to a SFH/townhouse.

As SFH/townhouses have ballooned in cost the local demands have moved towards 2+ bed units as they are now expecting these to be used as family units for the foreseeable future.

[GenWhy?]

Originally Posted by LeftCoaster

We're already seeing average unit size increase on its own, but yes I do think that investor preference for 1bd units has driven the unit mix to a lower equilibrium.

It's more complicated than that though, as most locals prefered smaller units as well, as the typical move was to live in a smaller unit then grow out of it and move to a SFH/townhouse.

As SFH/townhouses have ballooned in cost the local demands have moved towards 2+ bed units as they are now expecting these to be used as family units for the foreseeable future.

Exactly.

[whatnext]

Originally Posted by LeftCoaster

While I don't think housing supply is the whole problem, it certainly isn't helping things. While we are building a lot of housing, we simply aren't building enough, with 35,000 to 45,000 people moving to metro Vancouver a year we need to be building much more. last year was a record at about 26,000 starts, given that a lot of those were studios and 1 beds and we are trying to dig ourselves out of an already existing deficit, it simply isn't enough, and it's ONE of the reasons we have seen such crazy jumps in prices over the last two years.

But people doesn't equal households. The fact that the price per local earnings ratio is so out of whack is a good indicator supply won't solve the problem.

[LeftCoaster]

Originally Posted by whatnext

But people doesn't equal households. The fact that the price per local earnings ratio is so out of whack is a good indicator supply won't solve the problem.

I never said it would, I said it was part of the problem.

I even bolded 'ONE of the reasons' to make my point super clear...

I know you want to blame all BCs affordability issues on foreigners, but there are multiple issues driving the housing crunch.

[misher]

Originally Posted by LeftCoaster

I never said it would, I said it was part of the problem.

I even bolded 'ONE of the reasons' to make my point super clear...

I know you want to blame all BCs affordability issues on foreigners, but there are multiple issues driving the housing crunch.

Hear hear, foreigners are only a part of what has caused this. Also I think the income statistics are difficult to go by as we have large amounts of accumulated wealth here as well. It doesn't take into account the assets as many homes are owned by people in Vancouver who leave those homes to their descendants.

[whatnext]

From today's National Post, we can't build our way out of the problems created by money laundering:

Diane Francis: Money laundering by foreigners is what's really destroying housing affordability in Canada

Current proposals to flood the market with new affordable housing or to lift zoning restrictions won’t resolve anything

Of all the recent legal shenanigans in Ottawa, the failure to plug money laundering loopholes remains the most egregious.

Here’s the problem: Canadian cities rate highly among the most desirable in the world, but also the most unaffordable. Vancouver took the top spot for unaffordability in 2017 based on the gap between low incomes and high prices, according to a global study. Toronto was the 13th most unaffordable — a major obstacle to attracting talent or head offices.

The culprit has been money laundering — by criminals, kleptocrats and tax evaders. Their favourite means of hiding money is real estate. In 2018, Ontario and B.C. imposed a 15 per cent tax on non-resident buyers, resulting in home sales falling around 40 per cent in Vancouver in January compared to the same period last year...

https://business.financialpost.com/d..._autoplay=true

[misher]

Originally Posted by whatnext

From today's National Post, we can't build our way out of the problems created by money laundering:

Diane Francis: Money laundering by foreigners is what's really destroying housing affordability in Canada

Current proposals to flood the market with new affordable housing or to lift zoning restrictions won’t resolve anything

Of all the recent legal shenanigans in Ottawa, the failure to plug money laundering loopholes remains the most egregious.

Here’s the problem: Canadian cities rate highly among the most desirable in the world, but also the most unaffordable. Vancouver took the top spot for unaffordability in 2017 based on the gap between low incomes and high prices, according to a global study. Toronto was the 13th most unaffordable — a major obstacle to attracting talent or head offices.

The culprit has been money laundering — by criminals, kleptocrats and tax evaders. Their favourite means of hiding money is real estate. In 2018, Ontario and B.C. imposed a 15 per cent tax on non-resident buyers, resulting in home sales falling around 40 per cent in Vancouver in January compared to the same period last year...

https://business.financialpost.com/d..._autoplay=true

Did money laundering also reduce rental supply to 1% Or is it just home values your referring to?