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>Why are these houses vacant in the first place? Unknown. Until about 3 months ago, the municipal, provincial, and federal governments were all in lock-step ag

>Why are these houses vacant in the first place? Unknown. Until about 3 months ago, the municipal, provincial, and federal governments were all in lock-step agreement that there's no problem and everything is wonderful and there's no need to gather any kind of data about the housing crisis because that's just how things are in a World Class City™. As recently as May, our provincial finance minister was openly saying how great it was that "university students" were buying $32m mansions (that example was not a hypothetical). Right at the beginning of summer, some important election strategies went up in smoke very publicly. Between that and the Panama Papers leak showing that Vancouver real estate is a money laundering mecca, the housing crisis has become the #1 election issue. If you're trying to sneakily move money around using real estate, having a tenant calls a lot more attention to your activities than you'd probably want. Even if all your money is above board and you're just looking to hold onto a property to flip, a tenant can gum up the works. Evictions without cause take at least 2 months. There has been some data collected by 3rd parties. The most reliable collected thus far shows ~12% of apartments in Vancouver are sitting completely vacant year-round. That was with a very narrow definition of "vacant" (staying in the apartment for 2 weeks in the summer counted as "occupied"). But that data was collected by the power company. They didn't care about why, just how many.

conanbatt 10y ago
I agree that there is at least a sentiment, or a potential explanation that world-wide money movements can explain an abnormal demand for cities demographics. I am skeptical of that explanation, because housing has increased in rural areas as well, and in lesser cities. Moreover, increased demand could be accompanied by increased supply: cities could be building more. I know buenos aires is, and even though people complain about prices, demand for middle-class houses has been steady for almost 8 years and so has development. For sure i am absolutely against laws and rules that try to patch a problem that is not understood, having the risk of making the problem worse. I wonder what modern economists think of this.
- drspacemonkey 10y ago
  >I agree that there is at least a sentiment, or a potential explanation that world-wide money movements can explain an abnormal demand for cities demographics. At this point, it's a certainty that it's happening. The only question is to what extent. Overleveraged residents certainly isn't helping, but that alone simply cannot explain Vancouver real estate increasing in value more than the combined annual income of every resident in the city. >housing has increased in rural areas as well, and in lesser cities. That's usually chalked up to a combination of residents buying further out because they've been priced out of Vancouver, and former Vancouver owners who sold and are now looking for a "quieter" place to live. That's happened to at least one former landlord of mine, and my friend's parents are in the process of doing that right now. There's also an area to the south that is zoned for agricultural use, with mansion farmhouses and Ferraris parked out front. >cities could be building more In Vancouver, that's simply not possible to build more than we already are. People will often blame overregulation or zoning for not building more, but they completely forget about logistics. There isn't a single construction crew in the city that doesn't already have a huge backlog. Realistically, we're putting up towers as fast as they can be built and it's having zero measurable impact on housing affordability. And that's ignoring the already substantial problem of shoddy construction we have in this city. >For sure i am absolutely against laws and rules that try to patch a problem that is not understood, having the risk of making the problem worse. The general consensus among people I know is that it will have little to no effect. The government spent so long denying this problem even existed and openly refusing to even consider such a tax back in the spring, to implementing one overnight in the summer. Everyone here pretty much agrees that it's window dressing done to boost abysmal poll numbers in an election year. >I wonder what modern economists think of this. Economists out of UBC have been saying that the only explanation for such explosive, unrealistic growth in real estate is a flood of foreign money. Last I heard, they were calling this tax, at best, a good first step.
  - conanbatt 10y ago
    I googled this yesterday a bit, and at least in the us they are mentioning how development companies scaled back in 2008 and they are still ramping up construction: for the last 8 years, developers have been building less than the increase in demographics in the US. That could have been a global side-effect of the previous crisis. If it is so, this would automatically fix over the next 10 years. The more mainstream idea that the money is cheap is also getting reverted by the Fed by increasing its rates.\ > Economists out of UBC have been saying that the only explanation for such explosive, unrealistic growth in real estate is a flood of foreign money. Last I heard, they were calling this tax, at best, a good first step. Do you have any sources for this? This is a bit mindboggling: flood of foreign does not explain the global effect very well. Argentina doesnt have the same issue, but real estate prices also had its great increase. But also, flood of foreign money into a city like Vancouver could be helping a lot in its economic development: if a city is flooded with cash prices increase, but so does the economic revenue of many people in it: by putting a measure that limits money coming in, you could reduce prices but you would also reduce value, because the property is simply less desirable. In any case, we still dont know why a rich person would buy a property and never rent it out if he doesnt plan in living in it and thats the supply problem its trying to get targeted. Why would the chinese tycoon face depreciation of his property and losing money? It even looks like a business opportunity, if it is so.

conanbatt 10y ago

I agree that there is at least a sentiment, or a potential explanation that world-wide money movements can explain an abnormal demand for cities demographics. I am skeptical of that explanation, because housing has increased in rural areas as well, and in lesser cities. Moreover, increased demand could be accompanied by increased supply: cities could be building more. I know buenos aires is, and even though people complain about prices, demand for middle-class houses has been steady for almost 8 years and so has development. For sure i am absolutely against laws and rules that try to patch a problem that is not understood, having the risk of making the problem worse. I wonder what modern economists think of this.

drspacemonkey 10y ago
>I agree that there is at least a sentiment, or a potential explanation that world-wide money movements can explain an abnormal demand for cities demographics. At this point, it's a certainty that it's happening. The only question is to what extent. Overleveraged residents certainly isn't helping, but that alone simply cannot explain Vancouver real estate increasing in value more than the combined annual income of every resident in the city. >housing has increased in rural areas as well, and in lesser cities. That's usually chalked up to a combination of residents buying further out because they've been priced out of Vancouver, and former Vancouver owners who sold and are now looking for a "quieter" place to live. That's happened to at least one former landlord of mine, and my friend's parents are in the process of doing that right now. There's also an area to the south that is zoned for agricultural use, with mansion farmhouses and Ferraris parked out front. >cities could be building more In Vancouver, that's simply not possible to build more than we already are. People will often blame overregulation or zoning for not building more, but they completely forget about logistics. There isn't a single construction crew in the city that doesn't already have a huge backlog. Realistically, we're putting up towers as fast as they can be built and it's having zero measurable impact on housing affordability. And that's ignoring the already substantial problem of shoddy construction we have in this city. >For sure i am absolutely against laws and rules that try to patch a problem that is not understood, having the risk of making the problem worse. The general consensus among people I know is that it will have little to no effect. The government spent so long denying this problem even existed and openly refusing to even consider such a tax back in the spring, to implementing one overnight in the summer. Everyone here pretty much agrees that it's window dressing done to boost abysmal poll numbers in an election year. >I wonder what modern economists think of this. Economists out of UBC have been saying that the only explanation for such explosive, unrealistic growth in real estate is a flood of foreign money. Last I heard, they were calling this tax, at best, a good first step.
- conanbatt 10y ago
  I googled this yesterday a bit, and at least in the us they are mentioning how development companies scaled back in 2008 and they are still ramping up construction: for the last 8 years, developers have been building less than the increase in demographics in the US. That could have been a global side-effect of the previous crisis. If it is so, this would automatically fix over the next 10 years. The more mainstream idea that the money is cheap is also getting reverted by the Fed by increasing its rates.\ > Economists out of UBC have been saying that the only explanation for such explosive, unrealistic growth in real estate is a flood of foreign money. Last I heard, they were calling this tax, at best, a good first step. Do you have any sources for this? This is a bit mindboggling: flood of foreign does not explain the global effect very well. Argentina doesnt have the same issue, but real estate prices also had its great increase. But also, flood of foreign money into a city like Vancouver could be helping a lot in its economic development: if a city is flooded with cash prices increase, but so does the economic revenue of many people in it: by putting a measure that limits money coming in, you could reduce prices but you would also reduce value, because the property is simply less desirable. In any case, we still dont know why a rich person would buy a property and never rent it out if he doesnt plan in living in it and thats the supply problem its trying to get targeted. Why would the chinese tycoon face depreciation of his property and losing money? It even looks like a business opportunity, if it is so.