Two million reasons for high prices

[SpongeG]

the sun is running a series...

Two million reasons for high prices

Vancouver's housing affordability problem boils down to too many people on too little land

By Don Cayo, Vancouver Sun August 21, 2010


What drives Vancouver's house prices so relentlessly to levels four times higher than Winnipeg's, and more than half again what Torontonians pay?

It's simple, says Tsur Somerville of UBC Centre for Urban Economics and Real Estate.

"If you want Winnipeg-level house prices here, all you have to do is tear down the mountains and fill in the ocean."

Well, that puts slow or stop to the steady influx of people -- though the massive loss of amenities if our landscape were to be suddenly levelled might do that automatically.

"Depending where you draw the circle," Somerville says, "70 per cent of the land isn't developable. It's mountains or water or the United States."

Then, on top of this insurmountable geographic limitation, add the relentless population growth that, in good years and in bad, ranges from 1.3 to 1.5 per cent a year.

"The higher the population of a city, the higher the house prices," he says. "If we lose 70 per cent of the land, our metropolitan area of two million will have the same house prices as a seven-million metropolitan area. Because people have to commute the same distance."

The myths

Does this mean there's no truth to some, or all, of the pervasive myths? You know, the ones that maintain our housing costs are driven by rich immigrants looking to get families and/or mistresses out of Hong Kong or other Asian cities. Or by criminals laundering ill-gotten gains. Or speculators. Or empty nesters who reap big tax incentives to not budge from big houses on the best land. Or all that acreage tied up in parks and the Agricultural Land Reserve. Or the rules and fees imposed on developers. Or the property transfer tax on all home sales, and the HST on new ones. Or the civic amenities for which buyers pay through the nose. Or imprudent young buyers willing to take on massive debt. Or an inherent result of a good economy. Or ....

...

Read more: http://www.vancouversun.com/business...#ixzz0xI8SfBkR

upcoming:

Where We Live

Today: A combination of brilliant scenery and limited space keep the pressure on housing. The high cost of living also poses a threat to innovation and creativity.

Monday: To what extent do identifiable groups of buyers -- for example, criminals who are flush with drug money, or new immigrants who arrive with fortunes amassed abroad -- drive up Vancouver's property prices?

Tuesday: Do government taxes and fees and policies, including the many that are supposed to keep home ownership affordable, make house prices better or worse?

[cabotp]

No matter which way you cut it. The old simple idea of supply and demand has been and will always be the main driver behind the higher house prices.

All the other things mentioned will cause minor dips and blips and that is all.

[MechMike]

"The Big One" will solve everything less demand.

Unless of course Richmond and delta sink.

[Hed Kandi]

If this city is so seemingly pressed for land availability, then I must question the logic as to why social housing sites are being erected in the heart of downtown Vancouver.

Do the (homeless/mentally ill/drug addicted/ low income occupants) really need to be located in the midst of Canada's most expensive piece of real estate? Would it not be more suiting for these sites to be constructed in a location where the land prices are a little less exorbitant (eg. Port Moody, Maple Ridge, Delta)?

The second issue that needs to be immediately addressed is the zoning for the West End. There are far too many single storey and bi level houses occupying land that is much better suited for condo towers. Erecting condos in place of single family dwellings would allow for thousands of new West End residents. Thus a greater influx of housing availability would in turn drive down housing prices.

[cc85]

Originally Posted by Hed Kandi

If this city is so seemingly pressed for land availability, then I must question the logic as to why social housing sites are being erected in the heart of downtown Vancouver.

Do the (homeless/mentally ill/drug addicted/ low income occupants) really need to be located in the midst of Canada's most expensive piece of real estate? Would it not be more suiting for these sites to be constructed in a location where the land prices are a little less exorbitant (eg. Port Moody, Maple Ridge, Delta)?

Cities need to have social and affordable housing near their city centre in order to provide accommodation to residents who work in the core at low-paying jobs. I don't think a city will be very successful it it can't find an appropriate amount of people to work in menial jobs, you know your barista, secretary, window cleaner, custodian, etc. More than rich professionals are actually needed in a city.

[quobobo]

Originally Posted by Hed Kandi

The second issue that needs to be immediately addressed is the zoning for the West End. There are far too many single storey and bi level houses occupying land that is much better suited for condo towers. Erecting condos in place of single family dwellings would allow for thousands of new West End residents. Thus a greater influx of housing availability would in turn drive down housing prices.

Agreed, but replace "West End" with "all of Vancouver". Mandating freestanding houses anywhere in this city is terrible policy.

[whatnext]

Originally Posted by cc85

Cities need to have social and affordable housing near their city centre in order to provide accommodation to residents who work in the core at low-paying jobs. I don't think a city will be very successful it it can't find an appropriate amount of people to work in menial jobs, you know your barista, secretary, window cleaner, custodian, etc. More than rich professionals are actually needed in a city.

Not true. See Manhattan, Central London etc.

[Distill3d]

Originally Posted by Zegby

Do they even build houses in the lower mainland anymore??? And I'm not talking about massive mansions. Just a regular house. How can you deny people that lol

Check out Langley and Surrey, they build new regular subdivisions all the time. They also have the land to do so.

[cabotp]

Originally Posted by Hed Kandi

If this city is so seemingly pressed for land availability, then I must question the logic as to why social housing sites are being erected in the heart of downtown Vancouver.

Do the (homeless/mentally ill/drug addicted/ low income occupants) really need to be located in the midst of Canada's most expensive piece of real estate? Would it not be more suiting for these sites to be constructed in a location where the land prices are a little less exorbitant (eg. Port Moody, Maple Ridge, Delta)?

If all the social housing was built in the suburbs and those people work in Vancouver. You are now forcing them to spend extra money on tranportation. Money they most likely won't have as they are already on social housing.

[SpongeG]

Originally Posted by Hed Kandi

If this city is so seemingly pressed for land availability, then I must question the logic as to why social housing sites are being erected in the heart of downtown Vancouver.

Do the (homeless/mentally ill/drug addicted/ low income occupants) really need to be located in the midst of Canada's most expensive piece of real estate? Would it not be more suiting for these sites to be constructed in a location where the land prices are a little less exorbitant (eg. Port Moody, Maple Ridge, Delta)?

The second issue that needs to be immediately addressed is the zoning for the West End. There are far too many single storey and bi level houses occupying land that is much better suited for condo towers. Erecting condos in place of single family dwellings would allow for thousands of new West End residents. Thus a greater influx of housing availability would in turn drive down housing prices.

port moody maple ridge and delta are not part of vancouver city

each city has to provide social housing so burnaby, coquitlam, north vancouver, richmond etc all have some social housing

so no you can't just shove it "out there"

[mrjauk]

Originally Posted by Hed Kandi

If this city is so seemingly pressed for land availability...

...then why are rents cheap? Nobody I've asked, who subscribes to the "running out of land hypothesis," has ever been able to give me a good answer.

[SpongeG]

are they cheap?

$1200 for a one bedroom isn't that cheap

[SpongeG]

Vancouverites are sharply divided in the cost-of-housing debate

By DON CAYO 22 AUG 2010 COMMENTS(37) TAXING ISSUES

Filed under: property tax, HST, harmonized sales tax, housing policy, house prices
There's nothing like the cost of housing in Vancouver to touch off a lively debate.

The initial reaction to the first of what will be a three-part analysis of housing prices (accessible here) drew well over 100 comments in it's first 24 hours on the Web. While some of these are peppered with ideology and/or vitriol aimed at me or other posters, many raises or underline interesting points that that are well worth exploring.

The subsequent two parts of the series will deal with some, though not all, of the points raised in the discussion to date. Monday's tries to weigh impact of the some of the traditional bogeymen who are so often blamed for driving prices -- criminals, immigrants and so on. And Tuesday's will examine the role of governments in pushing up prices, in part through tax policies such as property tax and the HST, in part through endless fees and regulations, and in part through the unintended consequences when their efforts to make housing more affordable -- at least for some owners -- backfire and make it less affordable for others.

some selected comments...

karen
i bought a townhome in 1998 in coal harbour, it has pretty much tripled n value since that time, If i were to buy now i would be living in abbottsofrd.

Marty
@not buying it

Funny, it's always the non-owners who have it all figured out, in great detail as to why they haven't made the leap into property ownership.

Only when I see bulldozers in Kits and Point Grey pushing the beachhead out a mile, will I be worried that my $2M 2,300 sq ft home is a losing investment.

Sure, I'm maxed out, don't take vacations, shop at WalMart, ride a bike and buy second hand clothes, but there is no better thing than to own a piece of land on the west side of Vancouver.

Marty Johnstone

AG
I've lived in a few of these world class cities that people seem to constantly be referencing (I live in London at the moment) and I'm not sure people fully grasp the reality of life in cities like these. They may captivate you when you're on vacation, but the ability to 'live well' in a place like London is not easy. I have numerous friends in great careers (from network TV to top advertising agencies to architecture firms...) and these people are all forced to live in small apartments with roommates into their 30s. And you think we have issues with foreign wealth entering the housing market, a recent news article in the Evening Standard noted that over 100 Saudi billionaires had second homes in the Knightsbridge area alone.

Sure London has great restaurants, but most people aren't getting a reservation at one (or footing the bill). This is where a place like Vancouver dominates. There are so many great places to eat in Vancouver, at reasonable prices compared to the rest of the world, we are spoiled for choice. We also have far better service on average. Shopping for groceries is the same. Vancouver has some of the freshest, best food at affordable prices. One friend from Sydney (another city i've lived in) recently visited London and couldn't believe "how cheap liquor and groceries were". Sounds crazy, but Sydneysiders pay even more dearly than Londoners to sustain their daily lives.

Sure London and New York have great theatre and live music, but Vancouver gets all the same music gigs (and I'm not talking big name acts, but indie bands, progressive DJs, top jazz artists... you just need to look for it). Theatre would get better if we supported places like The Centre more. And the trade off for not having Broadway is that you get the beach and islands in the summer and mountains in the winter (cliche, but wait until you move away from them...).

Finally, let's look at a place like Scandinavia, another place I've lived. Scandinavia is considered the most literate place in the world, to have the best education systems, and to provide an incredible quality of life. Not only that, they are leaders in design (many fashion industry people I know in London get really excited about designers from Stockholm and Copenhagen - let alone Berlin and Antwerp - ie. not NYC, Paris or London) and the region ranks as one of the top exporters and influencers of music globally. However, they pay taxes in excess of 50% of their income, have to contend with very dark winters and pay exorbitant prices (beers in Oslo can set you back $15 a pint).

Basically, there is no utopia. If there was, everyone would be there. But Vancouver comes pretty close. As one born-and-raised Londoner said to me last year, upon learning I was from Vancouver: "What the **** are you doing here then?"

[Alex Mackinnon]

Maybe downtown, but even some decent 2 bedrooms are less than that as soon as you get outside downtown.

[SpongeG]

where?

I wanna move seriously I can't find anything under $1000

unless i live in someones basement in surrey

[Alex Mackinnon]

I looked at 3 basement suites yesterday all between 1050 and 1150. All of them we near Main or Cambie between 16th and 33rd. The best one was about 1000 sqft.

[whatnext]

Originally Posted by SpongeG

where?

I wanna move seriously I can't find anything under $1000

unless i live in someones basement in surrey

Even on Craigslist? Examples:

$990 Tastefully and newly renovated 2 Bedroom with a gorgeous huge eat-in kitchen opening onto deck and large fenced landscaped backyard with many fruit trees and a firepit. Gourmet kitchen has elegant black granite counters, maple cabinets, black GE appliances...--

$1000 / 1br - New! Completely Renovated, Clean & Bright..The suite is located on the 2nd floor of a heritage house..

$750 / 1br - 700 sq ft apartment suite in Marpole area (1425 W70 Ave.,

[WarrenC12]

Rents have been flat to stable because incomes have been flat to stable. It's as simple as that. This is also driven by the supply and demand of "a place to live".

I would agree that supply and demand drives the price of real estate as well, but it has nothing to do with people and the space of land.

[vansky]

compared to the big cities, housing is ok, that's the only way u can think...anyone notice a change in drinking water quality?

[mrjauk]

Originally Posted by SpongeG

are they cheap?

$1200 for a one bedroom isn't that cheap

It is if you would have to pay 450-500K to buy it.