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> “Who are we building for? What income brackets can afford these units being put up in Vancouver?” asks Andy Yan, director of The City Program at Simon Fraser

> “Who are we building for? What income brackets can afford these units being put up in Vancouver?” asks Andy Yan, director of The City Program at Simon Fraser University in Vancouver. That is such the wrong question to ask. We live in a market economy, no single person decides what sort of thing gets built - the market does. Today's luxury apartment is tomorrow's affordable one. It is unfair and unrealistic to expect the market to build brand new and cheap apartments. Those words to not go together. We can't just build more houses in the same size of city - it needs to expand outward. Stuffing more apartments in the same square mile won't do much.

jseliger 7y ago
http://cityobservatory.org/housing-cant-be-affordable_and_be-a-good-investment/ http://cityobservatory.org/housing-cant-be-affordable_and_be... The bigger issue is that "higher density" compared to the old status quo still isn't producing enough new housing to moderate prices; if prices remain high, there are only two fundamental methods to deal with high prices: increase supply or reduce demand.
shard972 7y ago
> We can't just build more houses in the same size of city - it needs to expand outward. Stuffing more apartments in the same square mile won't do much. Japan seems to be able to do this without house prices going out of control.
Guest42 7y ago
The goal is to build housing that is actually used as housing as opposed to a vehicle for speculation. Legislative policies determine the type and terms of the "market economy" that is lived in. If today's luxury apartment had a decent probability of being tomorrow's affordable one it would not have demand. Unless of course one assumes that luxury buyers are seeking to lose money.
- ultrarunner 7y ago
  Brand new luxury housing stays brand new forever?
  - jbay808 7y ago
    It becomes affordable after an extended period of its price decreasing, or appreciating slower than inflation... Which we're all waiting to see!
  - bobthepanda 7y ago
    Well, how long is tomorrow? Housing that becomes affordable by the time I am dead is not really "affordable" housing for me.
    - Consultant32452 7y ago
      It becomes approximately fifo. Oldest or otherwise least desirable housing becomes affordable housing as demand is met with newer more desirable housing being built. But if you're never building new housing, nothing gets pushed out the bottom to become affordable.
      - eastWestMath 7y ago
        That would make sense if location didn’t matter and people couldn’t renovate buildings.
        Consultant32452 7y ago
        That's just noise as long as construction keeps up with or outpaces demand. The problem is some cities have held back construction for decades, so it will take significant construction to get to the other side of the supply curve. As a thought experiment, what if you doubled the supply of housing units in Manhattan? Or 10x? 20x? I have a hard time believing housing prices would remain high.
    - closeparen 7y ago
      A market with more homes per housing seeker is more likely to contain one for you. As long as that ratio is less than one, some people are excluded. Price is what that looks like in a market. Under central planning it’s typically lotteries and waiting lists. Supply/demand balance in the region is much more important than the characteristics of any particular unit, and that’s what pro-growth activism is targeting.
- wtvanhest 7y ago
  Speculators do lose money on average.
- skookumchuck 7y ago
  Speculation just means flipping it to someone who wants to live in it.
  - erikpukinskis 7y ago
    It can also mean: - Holding an asset until users become more desperate - Taking an asset off the market in order to drive up the price of other assets in the category - Buying an asset to hold, if reliable bonds aren't available in your locale, or there are limits to what assets you can book locally Not to mention ulterior motives: - Money laundering - A vehicle for bribes Money is quite complicated actually.
    - skookumchuck 7y ago
      A dwelling has zero intrinsic value. Ultimately, it only has value if someone is living in it. Having real estate sit empty can only be a temporary affliction. Supply & demand - it's the law. --- Buying real estate to just hold is almost always a losing proposition because of taxes and the time value of money. It is not like a bond, because bonds have guaranteed payouts. Real estate fluctuates in value, quite a lot. It's very easy to lose pots of money in real estate. Thinking that users will become more desperate is hoping that the government will prevent supply from increasing, or that customers don't simply find other solutions. I suggest looking up what happened when the Hunt Brothers tried to corner the silver market by buying up the supply. Buying up your competition to drive up prices pretty much never works unless the government makes entry of competitors illegal or very hard.
      - sandworm101 7y ago
        >> Ultimately, it only has value if someone is living in it. I got kicked out of my unit vancouver unit (3500$/month) because my landlord wanted to sell. In Vancouver's market a unit with a renter is worth LESS than a vacant property. Clearing it out to repaint and upgrade a few faucets is worth more than the rent income. That's how twisted the market has become. Professional landlords like paying tenants. Investors see them as potential problems, irritants and impediments to redevelopment or construction.
- CryptoPunk 7y ago
  >>The goal is to build housing that is actually used as housing as opposed to a vehicle for speculation. You're completely ignoring Econ 101. Housing that is used as housing and housing that is a vehicle for speculation are not mutually exclusive. Rental properties produce rental income and appreciation for their owners. More people looking to make money from real estate investments results in more capital investment going into expanding housing stock, and thus more rental supply, which drives down rental rates. The places which suffer the most from lack of affordable housing tend to be those that put in place the most impediments to profit-motivated investment. In other words, they ignore basic economics.
- matchbok 7y ago
  Agreed! We need laws to limit speculation.
xienze 7y ago
> Today's luxury apartment is tomorrow's affordable one. Housing ain’t exactly the same as the used car market. I don’t think there’s such thing as a house that was once going for $1M+ that is now “affordable” unless it’s in a horrible state of disrepair.
- closeparen 7y ago
  The crappy student apartments where I went to school housed upper-class families in their day (before suburbanization). It happens. Deteriorated grandeur has a certain charm. More to the point, there are plenty of homes that were affordable and in disrepair not long ago, that are now going for $1M+ in exactly the same physical shape. San Francisco’s problem is definitely not that its housing stock is too nice.
- klyrs 7y ago
  That isn't even true of many cars. 20-30 year old luxury cars sell for tens of thousands -- which might be cheap or comparable to new low-end car, if you don't consider cost of ownership
- matchbok 7y ago
  Agreed, it is complex. I'd argue, though, that older apartments in nice neighborhood usually rent for less than brand-new ones.
anonymous5133 7y ago
The problem is the real estate market is very heavily regulated. So even if the market is demanding 50,000 more high-rise condo units be built...it can't happen if the area only approves 5,000 units. That's why it is so important to have smart regulations that promote growth. In real estate, it is easy for certain groups to be anti-building because they know it will skyrocket their existing real estate investments.
- savant_penguin 7y ago
  smart regulations pick one
  - thrax 7y ago
    Libertarians are dumb assholes.
slg 7y ago
>Today's luxury apartment is tomorrow's affordable one That isn't necessarily true. It is most obvious when a neighborhood is experiencing gentrification. For example, imagine a SRO hotel in which the rooms are no more than one or two hundred square feet. Buildings like this used to be incredibly common in the Skid Row neighborhood of Los Angeles and multiple neighborhoods in San Fransisco. Many of those buildings are being knocked down in order to replace them with high-rise luxury condos. Since the new buildings are high-rises replacing much smaller structures, the new units can have several times more space per unit and still increase the density of the lot. The problem is that a 1000 sqft unit with amenities like an in unit washer and dryer is never going to drop to the price of a 200 sqft SRO room that doesn't even have an in unit toilet and shower. The new and old homes are so far apart that they don't behave like they are part of the same market.
- reaperducer 7y ago
  And on the other end of the same point, not all luxury residential buildings become affordable. Case in point: The John Hancock Center in Chicago. 700 units of luxury living since 1969. Apartments may depreciate, but in a good number of cases condos don't get any cheaper.
  - Consultant32452 7y ago
    As a thought experiment, imagine the city tore down every other building in Chicago and filled every square inch of real estate with cookie cutter copies of the John Hancock center. The number of total available units in the city would skyrocket. Do you believe per unit price would remain the same?
    - slg 7y ago
      The per unit price would obviously drop compared to the existing John Hancock Center. The per unit cost citywide might drop (I don't have enough information about Chicago to say for sure, but it is certainly feasible). But it is unlikely that any of these new units would be as cheap as the cheapest units that currently exist in Chicago. That is a problem that this market approach to affordable housing doesn't solve. Housing isn't a single market in which every unit is interchangeable. You need a wide variety of different housing options in order to house a wide variety of people.
majormajor 7y ago
I think "just build denser housing" is tomorrow's "let's just add lanes to the freeways." We have to consider the whole system - jobs, office space, etc. If more housing just makes a healthy job market grow even faster in a loop, you've changed a lot just to stand still affordability-wise. Do we really need ever-growing city centers vs some more disperse way of working and living?
- magila 7y ago
  Even in the unlikely event that prices did stay the same after building massively more housing, it would still mean a whole lot more people able to live in a highly desirable area. Who are you to tell people where and how they should work and live?
amiga_500 7y ago
The price of the land is set by the rental profit. If you tax land to increase the cost of carry you will see prices fall. Taxes work.
- snowwindwaves 7y ago
  Increasing taxes on all landlords would cause upwards pressure on rents as lanlords would need to collect more money to cover their costs and hopefully save enough to be able to retire one day. Disclaimer: I am a landlord
  - amiga_500 7y ago
    Totally wrong, this is not how prices are set.
    - snowwindwaves 7y ago
      when my margins go down I will raise the rents. I currently could charge more but I believe charging slightly less than market gets me a better tenant and some goodwill since I am not a full time landlord.
      - amiga_500 7y ago
        Anecdotal. Not the rule
rdlecler1 7y ago
To be fair, they were leveling perfectly good lower income housing to make way for luxury apartments.
cynicalkane 7y ago
> Today's luxury apartment is tomorrow's affordable one. Moreover, today's luxury apartment turns yesterday's luxury apartment into a less expensive one.
maxxxxx 7y ago
" the market does." Markets are a product of a lot of rules that favor one thing or the other. It's not a natural law that markets and the rules have to be exactly the way they are now.
touristtam 7y ago
Does Canada not have an affordable house act that mandate that part of the newly created stock be put on the market for an accessible renting price?
Tiktaalik 7y ago
It would be a peculiar question to ask if Vancouver was a closed system but it's not. The reality is that many of these new condos are being marketed extensively in HK and other places where there are deep pocketed investors looking for good yields and which may not be able to participate in their own local market. With this context, it's very appropriate to ask pointed questions about 'whom a development is for.' Is the development accessible by locals whose income is limited by the nature of the local economy, or is it intentionally developed for a global audience whose incomes a local may be incapable of reaching?

jseliger 7y ago

http://cityobservatory.org/housing-cant-be-affordable_and_be-a-good-investment/ http://cityobservatory.org/housing-cant-be-affordable_and_be... The bigger issue is that "higher density" compared to the old status quo still isn't producing enough new housing to moderate prices; if prices remain high, there are only two fundamental methods to deal with high prices: increase supply or reduce demand.

shard972 7y ago

> We can't just build more houses in the same size of city - it needs to expand outward. Stuffing more apartments in the same square mile won't do much. Japan seems to be able to do this without house prices going out of control.

Guest42 7y ago

The goal is to build housing that is actually used as housing as opposed to a vehicle for speculation. Legislative policies determine the type and terms of the "market economy" that is lived in. If today's luxury apartment had a decent probability of being tomorrow's affordable one it would not have demand. Unless of course one assumes that luxury buyers are seeking to lose money.

ultrarunner 7y ago
Brand new luxury housing stays brand new forever?
- jbay808 7y ago
  It becomes affordable after an extended period of its price decreasing, or appreciating slower than inflation... Which we're all waiting to see!
- bobthepanda 7y ago
  Well, how long is tomorrow? Housing that becomes affordable by the time I am dead is not really "affordable" housing for me.
  - Consultant32452 7y ago
    It becomes approximately fifo. Oldest or otherwise least desirable housing becomes affordable housing as demand is met with newer more desirable housing being built. But if you're never building new housing, nothing gets pushed out the bottom to become affordable.
    - eastWestMath 7y ago
      That would make sense if location didn’t matter and people couldn’t renovate buildings.
      - Consultant32452 7y ago
        That's just noise as long as construction keeps up with or outpaces demand. The problem is some cities have held back construction for decades, so it will take significant construction to get to the other side of the supply curve. As a thought experiment, what if you doubled the supply of housing units in Manhattan? Or 10x? 20x? I have a hard time believing housing prices would remain high.
  - closeparen 7y ago
    A market with more homes per housing seeker is more likely to contain one for you. As long as that ratio is less than one, some people are excluded. Price is what that looks like in a market. Under central planning it’s typically lotteries and waiting lists. Supply/demand balance in the region is much more important than the characteristics of any particular unit, and that’s what pro-growth activism is targeting.
wtvanhest 7y ago
Speculators do lose money on average.
skookumchuck 7y ago
Speculation just means flipping it to someone who wants to live in it.
- erikpukinskis 7y ago
  It can also mean: - Holding an asset until users become more desperate - Taking an asset off the market in order to drive up the price of other assets in the category - Buying an asset to hold, if reliable bonds aren't available in your locale, or there are limits to what assets you can book locally Not to mention ulterior motives: - Money laundering - A vehicle for bribes Money is quite complicated actually.
  - skookumchuck 7y ago
    A dwelling has zero intrinsic value. Ultimately, it only has value if someone is living in it. Having real estate sit empty can only be a temporary affliction. Supply & demand - it's the law. --- Buying real estate to just hold is almost always a losing proposition because of taxes and the time value of money. It is not like a bond, because bonds have guaranteed payouts. Real estate fluctuates in value, quite a lot. It's very easy to lose pots of money in real estate. Thinking that users will become more desperate is hoping that the government will prevent supply from increasing, or that customers don't simply find other solutions. I suggest looking up what happened when the Hunt Brothers tried to corner the silver market by buying up the supply. Buying up your competition to drive up prices pretty much never works unless the government makes entry of competitors illegal or very hard.
    - sandworm101 7y ago
      >> Ultimately, it only has value if someone is living in it. I got kicked out of my unit vancouver unit (3500$/month) because my landlord wanted to sell. In Vancouver's market a unit with a renter is worth LESS than a vacant property. Clearing it out to repaint and upgrade a few faucets is worth more than the rent income. That's how twisted the market has become. Professional landlords like paying tenants. Investors see them as potential problems, irritants and impediments to redevelopment or construction.
CryptoPunk 7y ago
>>The goal is to build housing that is actually used as housing as opposed to a vehicle for speculation. You're completely ignoring Econ 101. Housing that is used as housing and housing that is a vehicle for speculation are not mutually exclusive. Rental properties produce rental income and appreciation for their owners. More people looking to make money from real estate investments results in more capital investment going into expanding housing stock, and thus more rental supply, which drives down rental rates. The places which suffer the most from lack of affordable housing tend to be those that put in place the most impediments to profit-motivated investment. In other words, they ignore basic economics.
matchbok 7y ago
Agreed! We need laws to limit speculation.

xienze 7y ago

> Today's luxury apartment is tomorrow's affordable one. Housing ain’t exactly the same as the used car market. I don’t think there’s such thing as a house that was once going for $1M+ that is now “affordable” unless it’s in a horrible state of disrepair.

closeparen 7y ago
The crappy student apartments where I went to school housed upper-class families in their day (before suburbanization). It happens. Deteriorated grandeur has a certain charm. More to the point, there are plenty of homes that were affordable and in disrepair not long ago, that are now going for $1M+ in exactly the same physical shape. San Francisco’s problem is definitely not that its housing stock is too nice.
klyrs 7y ago
That isn't even true of many cars. 20-30 year old luxury cars sell for tens of thousands -- which might be cheap or comparable to new low-end car, if you don't consider cost of ownership
matchbok 7y ago
Agreed, it is complex. I'd argue, though, that older apartments in nice neighborhood usually rent for less than brand-new ones.

anonymous5133 7y ago

The problem is the real estate market is very heavily regulated. So even if the market is demanding 50,000 more high-rise condo units be built...it can't happen if the area only approves 5,000 units. That's why it is so important to have smart regulations that promote growth. In real estate, it is easy for certain groups to be anti-building because they know it will skyrocket their existing real estate investments.

savant_penguin 7y ago
smart regulations pick one
- thrax 7y ago
  Libertarians are dumb assholes.

slg 7y ago

>Today's luxury apartment is tomorrow's affordable one That isn't necessarily true. It is most obvious when a neighborhood is experiencing gentrification. For example, imagine a SRO hotel in which the rooms are no more than one or two hundred square feet. Buildings like this used to be incredibly common in the Skid Row neighborhood of Los Angeles and multiple neighborhoods in San Fransisco. Many of those buildings are being knocked down in order to replace them with high-rise luxury condos. Since the new buildings are high-rises replacing much smaller structures, the new units can have several times more space per unit and still increase the density of the lot. The problem is that a 1000 sqft unit with amenities like an in unit washer and dryer is never going to drop to the price of a 200 sqft SRO room that doesn't even have an in unit toilet and shower. The new and old homes are so far apart that they don't behave like they are part of the same market.

reaperducer 7y ago
And on the other end of the same point, not all luxury residential buildings become affordable. Case in point: The John Hancock Center in Chicago. 700 units of luxury living since 1969. Apartments may depreciate, but in a good number of cases condos don't get any cheaper.
- Consultant32452 7y ago
  As a thought experiment, imagine the city tore down every other building in Chicago and filled every square inch of real estate with cookie cutter copies of the John Hancock center. The number of total available units in the city would skyrocket. Do you believe per unit price would remain the same?
  - slg 7y ago
    The per unit price would obviously drop compared to the existing John Hancock Center. The per unit cost citywide might drop (I don't have enough information about Chicago to say for sure, but it is certainly feasible). But it is unlikely that any of these new units would be as cheap as the cheapest units that currently exist in Chicago. That is a problem that this market approach to affordable housing doesn't solve. Housing isn't a single market in which every unit is interchangeable. You need a wide variety of different housing options in order to house a wide variety of people.

majormajor 7y ago

I think "just build denser housing" is tomorrow's "let's just add lanes to the freeways." We have to consider the whole system - jobs, office space, etc. If more housing just makes a healthy job market grow even faster in a loop, you've changed a lot just to stand still affordability-wise. Do we really need ever-growing city centers vs some more disperse way of working and living?

magila 7y ago
Even in the unlikely event that prices did stay the same after building massively more housing, it would still mean a whole lot more people able to live in a highly desirable area. Who are you to tell people where and how they should work and live?

amiga_500 7y ago

The price of the land is set by the rental profit. If you tax land to increase the cost of carry you will see prices fall. Taxes work.

snowwindwaves 7y ago
Increasing taxes on all landlords would cause upwards pressure on rents as lanlords would need to collect more money to cover their costs and hopefully save enough to be able to retire one day. Disclaimer: I am a landlord
- amiga_500 7y ago
  Totally wrong, this is not how prices are set.
  - snowwindwaves 7y ago
    when my margins go down I will raise the rents. I currently could charge more but I believe charging slightly less than market gets me a better tenant and some goodwill since I am not a full time landlord.
    - amiga_500 7y ago
      Anecdotal. Not the rule

rdlecler1 7y ago

To be fair, they were leveling perfectly good lower income housing to make way for luxury apartments.

cynicalkane 7y ago

> Today's luxury apartment is tomorrow's affordable one. Moreover, today's luxury apartment turns yesterday's luxury apartment into a less expensive one.

maxxxxx 7y ago

" the market does." Markets are a product of a lot of rules that favor one thing or the other. It's not a natural law that markets and the rules have to be exactly the way they are now.

touristtam 7y ago

Does Canada not have an affordable house act that mandate that part of the newly created stock be put on the market for an accessible renting price?

Tiktaalik 7y ago

It would be a peculiar question to ask if Vancouver was a closed system but it's not. The reality is that many of these new condos are being marketed extensively in HK and other places where there are deep pocketed investors looking for good yields and which may not be able to participate in their own local market. With this context, it's very appropriate to ask pointed questions about 'whom a development is for.' Is the development accessible by locals whose income is limited by the nature of the local economy, or is it intentionally developed for a global audience whose incomes a local may be incapable of reaching?