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A new private-investment fund puts money into Canadian subsidized housing projects

November 17th, 2015 · 4 Comments

It’s been a struggle in Canada to create affordable housing since the federal government bailed out of supports for social housing under the Liberals in 1994.

Their withdrawal prompted many provinces to cut back or eliminate their programs.

That’s left cities, with a limited tax base, and non-profits to struggle with this on their own. For cities, the solution has often been to either provide free or discounted land, through a lease, or cover some of the costs through giving extra density to a site or both.

And even under those circumstances, it’s taken some creative thinking. The latest in that creativity is a new investment fund that’s been developed under the leadership of a former Scotia banker, who seems to have devoted considerable thought to how to get private investors to see putting their money into subsidized housing as a good deal.

The trick is to underscore the competitive returns the investment will get, compared to the private market. As Garth Davis explains, that’s possible because subsidized-housing projects get free or discounted leased land and they traditionally have the lowest (i.e. non-existent) vacancy rates, since there is a line-up for those units.

As I wrote in my Globe story last week, this creation, New Market Funds, is putting $11-million into Vancouver’s experiment in creating subsidized housing with no federal and limited provincial help.

There was quite a bit of discussion on Twitter about the risks and the structure of this kind of lending — and a lot of interest.

Funds like this aren’t new. There are many in the U.S. However, those are usually dependent on investors getting a return through the American tax incentives for low-cost housing. So this Canadian fund, which has to rely on other mechanisms, is really breaking new ground.




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Two views of the Vancouver real-estate scene: two worlds colliding

November 17th, 2015 · 9 Comments

I can’t imagine what it’s like for average residents in Vancouver to try to square these two perspectives, which drifted across my screen last week.

Peter O’Neil’s story in the Vancouver Sun, titled “Canada a friendly home for illicit cash, corrupt real-estate buys, report says”

And this series in New Canadian Media, with a very different view of the Vancouver housing situation by local writer Ng Weng Hoong.


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Many cities around Vancouver region pondering impact of “dark houses/condos” and foreign or investor capital

November 12th, 2015 · 4 Comments

An interesting debate broke out at Metro Vancouver’s planning committee meeting last Friday, which I followed up on this week.

It started with a report on affordable housing or, rather, the startling lack of it in the region. There are lots and lots of apartments being built, theoretically enough to house all the newcomers who arrive every month. Problem is, most of it is priced too high for the lower-income people who arrive. There was a 6,800-unit shortage in the 2011-2014 period.

Michael Smith of West Van then proposed a stiff tax on properties that are left vacant, which he said are eroding the sense of community there. He said he pays high taxes on his Kauai property ($20,000, he told me later) because he is a non-resident and that could be applied here. (Links to maps on “dark census tracts” on the page turn.)

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What data is it really that we’re looking for in Vancouver’s housing market?

November 4th, 2015 · 28 Comments

It’s been a remarkable couple of days this week, for those who are interested in the hot topic of Vancouver housing and how much foreign money is flowing into it.

A study by UBC adjunct prof and planner Andy Yan was the latest to set off the fireworks, with his stats on 172 sales in the Point Grey area of town during six months last fall and winter. He looked at buyers with non-Anglicized names, the stated occupations of buyers on land titles, and whether they had mortgages.

There’s been a frenzy of debate about whether this was racist (with some opining that because Andy is Chinese, it couldn’t possibly be) or the clincher stats needed to understand what is happening with real estate in this crazy town or what.

I did a story for the Globe on some of the different opinions out there, with former NDP cabinet minister Darlene Marzari saying she welcomes the information with hard numbers and UBC law prof Margot Young talking about the need for more focus on the actual problem (global capital) instead of ethnicity.

And UBC prof David Ley, who has done the most work on trying to understand this phenomenon since it first started to appear in the 1980s, said he also worries that the debate over nationality of money is obscuring the essential problem: the way the Canadian and B.C. governments crafted policy in the ’80s that opened the door for wealthy people from around the world to park their money here, with programs designed to allow them to avoid taxes and with no requirement that they participate fully in Canadian life, taxes, and the social system.

The heart of this debate is about what information we think we need to have to understand this issue and to push for policy changes.

It seems to me that people in this city care about three essentials.

  1. What impact is global capital having on Vancouver’s property market as a whole? How much is it increasing housing prices overall, making the city unaffordable for the people working in businesses and raising families here?
  2. What impact is global capital having on individual neighbourhoods, because of houses being left vacant, houses that represent the history of the city being demolished, and the sense of community being eroded?
  3. What federal or provincial policies are facilitating destructive global capital?

Unfortunately, Andy’s study from this week didn’t really answer the key questions. I know he’s got some other good work on the way that tries to tackle some of these questions. And his study Monday was interesting in its documentation of the fact that 82 per cent of the buyers of these expensive homes on the west side got mortgages, i.e. no bags of cash.

But what else did we learn and what is missing?

We learned that 66 per cent of the buyers of those expensive west-side homes had non-Anglicized Chinese names. We learned that 32 per cent of the purchases (52 homes) had “homemaker” on the land title and six per cent (8 homes) had students listed. I can’t find anything on Andy’s published study to indicate whether all those homemaker and student homes were among the Chinese-name group or whether some were Chinese and others were not.

What we didn’t learn: We don’t know if they were foreign investors, temporary residents, permanent resident, non-resident dads parking their wives and children here, or families who moved here wanting desperately to get out of China with its smog and suffocating education system — families who are fully planning to create a new life rooted in Vancouver. If I may remind people, it’s possible there are still some of them.

We didn’t learn how many homes that were purchased are sitting vacant or have been demolished and are being rebuilt and how many are being occupied by people trying to integrate into a new life.

We learned nothing about whether capital is being parked, whether there is flipping going on, what role speculation is playing, how many houses are being bought by someone who continues to work in China as a non-resident while leaving family here.

(One story that at least tried to get at part of that recently was Kathy Tomlinson’s in the Globe, where, in part of the story, she looked at the sales histories of more than 200 properties and showed which ones had changed hands rapidly and how the prices had increased.)

What we got was a small slice of sales history in one part of town that said pretty much what we’ve heard elsewhere for the last couple of years: People with Chinese names are buying property on the west side.

Andy did try to qualify his study with all kinds of caveats about what his data meant.

As he wrote: “The purpose of this study is not to necessarily solely focus on a single ethnic group, but in understanding how residential real estate might be consumed in the City of Vancouver with a focus on the enabling financial practices and structures in Canada.”

But that definitely got lost in the shuffle, especially because of the exclusive focus on the non-Anglicized Chinese names. It would be interesting if someone at least glanced at the Korean or other immigrant buyers on the west side, who are showing up as a small but steady stream.

Calling the study racist is really a stretch. But there are studies that seem to encourage conversations that are more about race (easy to ignite in this city with its long history of anti-Chinese sentiments) and other studies that seem to encourage conversations that are more about the role of global capital and government policy. It would be good to see academics discuss how to ensure the latter, if that’s really what they are aiming for.


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And now for something completely different: A restaurant tour in the Mission district, San Francisco

November 3rd, 2015 · 5 Comments

A nice break of an assignment for me. An editor at Western Living asked me to do five restaurants in San Francisco. But I said our vow was to eat only at restaurants we could walk to in the Mission. So he let me narrow the scope.

The trick was picking only five. There were so many within walking distance of our VRBO apartment on 17th between Dolores and Guerrero. Delfina, Bar Tartine, several dozen taco shops, Mission Chinese, Flour + Water, various pupusa places recommended by my knowledgeable tweeps, and so on. Here are the five I picked in the end.

Of course, behind this decadence, it was impossible not to hear the waves of anxiety about the changes in the neighbourhood. Our place was owned by a former business writer from New York who’d bought it to live in the back apartment and rent out the front space through VRBO, as well as the duplex next door. (Occupied by our stay by a very heavy-footed French family with bicycles.) And she said it was disconcerting to realize that she could easily be bought a sold by the 20-something bazillionaires in the ‘hood, getting rich from their start-ups.

But it was interesting to see that gentrification can only go so far. I ended up at one point taking a city bus around the backside of Potrero Hill and through the area of the Mission east of Mission Street. It was still filled with obvious social housing in parts (which looked like a minimum-security prison) and pretty modest bungalows. A reminder that it takes more than a few years to transform a neighbourhood.

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Part 2: Why just looking at info on “Chinese” and “income” in a few areas is no way to understand anything

November 2nd, 2015 · 15 Comments

(Continuing from last week’s post …)

We all jump to conclusions quickly. Journalists are the most famous for it — three of anything within a week is a trend. But, in fact, we all do it, journalist or not, in an attempt to understand the world’s complexity.

So it’s normal to look at a few census tracts and think, Gee, that’s an area where I know a lot of new Chinese immigrants live (or that’s what the neighbours say). And it’s an expensive area. And it looks like a lot of people are claiming they have low incomes there. So, it must be that …

The flaw is that we don’t look beyond that. We don’t look at the neighbourhood next door, one that also has a lot of new Chinese immigrants, one that’s also in an expensive area, but one where the rate of low-income households is not that high. Or the area that is expensive and that has a high rate of low-income households but where the level of new Chinese immigrants is low.

Academic researchers run what are called regression analyses to test whether there is really a connection between different variables.

It’s a standard feature of almost any study that attempts to prove anything. Do people who do strength training have better results in retaining memory functions than people who do yoga? You need to make sure that the strength-trainers and the yoga-ites are comparable on every other scale: a mix of ages and occupations, a similar range of diets, comparable levels of crossword-puzzle and other brain-boosting activities, and so on. Otherwise you run the risk of concluding that strength training is better, when actually the kind of people who like to do strength training also do a number of other related things that tend to boost memory.

My last post got kind of long, so I skipped talking about this.

But I’m adding this to make the point to everyone trying to understand Vancouver by looking at a few census tracts at a time. It can’t be done, or at least not to the level that any serious researcher would think was credible. You have to look at the region overall and figure out, i.e. does the number of new Chinese immigrants correlate at a significantly high rate with the level of low-income households in that tract. (It’s also good if you can do these kinds of correlation over time as well i.e. as more and more new Chinese immigrants move into an area, does the rate of this or that other factor increase as well in something approaching lockstep?)

This is true for some of the research showing up related to students or homemakers being listed on land titles as owners. On the face of it, it seems weird that people in those categories are listed as owners in expensive areas. But to make the case absolutely solidly, you’d need to look at what occupations are listed everywhere. Maybe it will show that a suspiciously high number of homemakers and students are buying only in particular high-end areas. But maybe it will show that a lot of homes throughout the region are allegedly owned by homemakers and students and that there’s barely a difference between the west side and anywhere else in town.

Yes, it’s a lot of work to do that. Hardly anyone is doing that kind of work. Well, except for one of my researcher friends who has provided the analysis below. He ran the variables through the program to see whether there were any distinct correlations. There weren’t, except for very minor effects. I’ve provided his full analysis below. I can’t understand more than a quarter of it, but maybe some of you can. I can understand enough to see that, yet again, there’s no smoking gun yet.

I hope everyone gets that I’m doing this because I believe that ideas should be tested. It’s dangerous to have everyone spouting the same conventional wisdom.

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Why you should be wary of stories saying “census proves rich Asians live in mansions and pay no taxes”

October 29th, 2015 · 38 Comments

Someone sent a question to my blog a few weeks ago, asking what I thought of the then-recent news stories saying that census information indicated that areas with wealthy Asians were reporting low incomes and/or housing costs exceeding their incomes and therefore must be avoiding taxes in some illegal way. (And maybe even collecting welfare to boot!)

Links to the stories here, here and here, which varied in how cautious they were about these stats, if you can access these.

It’s taken a while to do the research, with my two day jobs and all, but here I am.

Okay, there will be a lot of nerd stuff later on and many references to dissemination areas and census tracts and rate of return.

But, for those of you with lives to live, here’s the short answer.

The two researchers whose numbers and maps have been used as the basis of those stories say, in essence, “It’s wrong to jump to those quick conclusions.”

There may be evidence out there that someone will find someday to confirm the dark suspicions that wealthy mainland Chinese are immigrating here, using Canadian services but avoiding Canadian taxes. This census information isn’t that evidence.

(Neither, by the way, are stories of this or that proven case of unreported foreign income, any more than stories about wealthy white Canadians hiding their money in offshore trusts on the Isle of Man proof that all wealthy white Canadians are crooks. But that’s for another day.)

Why it’s dangerous to draw inferences too quickly

 To put it in the words of one of them, Jens von Bergmann: ”It’s tricky to make substantive claims based on maps showing geographic overlap of immigration from China and poverty and these maps need more explanation than I have been willing to put in the map descriptions.”

He said he wishes now that he had put more cautions alongside his maps when he tweeted them out. Von Bergmann’s delightful and rabbit-hole seductive site that colour-codes census information onto maps is here:

Besides von Bergmann, UBC prof Daniel Hiebert also said it’s premature come up with definitive conclusions just by looking at a couple of variables from the census information. (And three other stats specialists I talked to said the same and added more qualifiers.)

“There are cautionary tales around the whole project,” said Hiebert, who listed off several reasons why people living in expensive areas might be reporting low income.

Hiebert didn’t actually do a study on wealthy Asians declaring low incomes, by the way, as some might have inferred from the coverage.

He did a study published in August about ethnic enclaves in Canada. He found that enclaves are becoming more prevalent, but that they are generally not low-income, marginalized ghettos. Instead, he reported on many positives: immigrants are becoming homeowners at surprisingly high rates, those in enclaves are less dependent on government payments, and the enclaves work as springboards for new immigrants into Canadian society.

He did include maps that combined information from census-tract data on enclaves and high levels of poverty (more than 30 per cent of people in the area classified as low income). His study is here.

You can also look at the maps Stats Canada produced showing which census tracts across the country showed high levels of poverty.

As you’ll see if you read on to my most wonkish and detailed section at the end, there are many census tracts in wealthy areas that have a high proportion of Chinese or Asian residents and are NOT reporting unusual levels of poverty.

There are also wealthy areas reporting high levels of poverty and with a lot of new Chinese immigrants, but where there are also a lot of renters or people in subsidized housing.

We sometimes forget how many basement suites, special-needs homes, and social housing are secretly sprinkled around the city, even in the poshest areas. Even in the four census tracts that are, generally, well-off Dunbar, the proportion of renters ranges from 19 to 23 per cent.

I’ll also list all the reasons later people gave me about why these numbers need more scrutiny, ranging from “this isn’t tax-return information so we don’t actually know what taxes were paid” to the usual cautions about all of this data because it comes from, guess what, the long-form census. But in the meantime …

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Why I’ll miss the viaducts if they go

October 25th, 2015 · 53 Comments

I’ve been accused before of judging the city on the basis of looks, rather than function. This is another example.

But how the city looks sometimes does have a bearing on how it functions. How it looks is the physical representation of us, the people who live here, and what we value, who we are now and what we have been since we’ve inhabited this land where the city now exists.

And so, you might think, with that opening, I would be writing about how I can hardly wait for the viaducts to come down, for the beautiful park to appear and the new festival wharf, the artistic new seawall, the new, beautifully landscaped streets that don’t go past chain link fences and rusting hulks of something and parking lots, as Expo and Pacific boulevards do now.

I’m sure it will all be spectacular. I’ll come to appreciate it. The Olympic Village, across the way, with its bridges, parks, and little island, is now one of my favourite parts of the city. I understand the logic behind the recommendations and also the opportunities.

But I will miss the viaducts.

I’ll miss them because they’re grubby and unattractive and originally built to go over the rail tracks that ran through False Creek. I’ll miss them because they give Vancouver the feel of a working city, one that’s not all about being shiny and perfect so that the tourists will visit and more people will want to buy condos here.

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What do the federal elections results mean for this region? Your say

October 20th, 2015 · 75 Comments

The floor is yours. Thoughts?

I personally would like to know who the Liberal replacement will be for Colin Metcalfe.

For those who aren’t up on the arcana of local federal politics, this former campaigner manager for mayor Sam Sullivan became the Conservative point person in B.C., running the local office and co-ordinating Conservative interactions with local governments. Anyone got any nominations?

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At long last, B.C. reaps some bonus profits from Expo land sale. And now Vancouver wants it.

October 20th, 2015 · 3 Comments

A delicious find in the Vancouver viaducts report going to council today. (That would be Tuesday, Oct. 20, the day after the federal election and when the world started spinning in a different direction.)

Which was: Long ago, when the province sold the Expo lands to Li Ka-shing for what many called a fire-sale price, it wrote in a provision to the agreement that the province would get some of the profits if Concord ever got permission from the city to build more than 12 million square feet on the land.

At the time, it seemed unlikely.

But here we are. Concord is now within 400,000 square feet of that limit and will exceed it when it builds its Northeast False Creek towers, whatever level of density the city finally agrees to give. (Apparently the viaducts take-down could result in a million more square feet of density in the area, but it’s not all Concord’s.)

And the city wants the anticipated share of the money the province is going to get, in order to pay for housing. (First response out of the province appears to be along the lines of Drop Dead, Vancouver, but this is just the start of negotiations, I’m sure.)

My story on this is here. I will post the agreement attached to the land sale later for my armchair experts to peruse. (IanS?) And maybe someone can actually figure out what the sale price is, because I sure can’t from looking at the complicated calculations in the agreement.

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