Temperature just keeps going up in this city. The climate change of debate heat.
June 5th, 2016 (Vancouver, BC) – In the past week, we’ve heard a growing chorus of concerns about the economic risk posed by skyrocketing housing prices in Vancouver. Both the Bank of Nova Scotia and the National Bank of Canada urged the federal government to intervene in our housing market, and the OECD’s recent Global Economic Outlook warned that Vancouver’s economy is at risk due to rising household debt and surging housing prices.
It’s fitting that this was the same week as the Real Estate Board of Greater Vancouver released new data showing a 37% increase in year over year detached housing prices in Metro Vancouver. These trends are not sustainable and we need to be wide awake to the risks they pose to the stability of our economy, let alone the impact they have in pushing local residents, especially young people, families, and seniors, out of our neighbourhoods.
While adding more housing supply is crucial, it is not an affordability solution on its own. With unregulated, speculative global capital flowing into Metro Vancouver’s real estate, we are seeing housing prices completely disconnected from local incomes. First and foremost, housing needs to be for homes, not just treated as a commodity.
I urge the provincial and federal governments to heed the warnings from the financial sector and implement clear measures to rein in the excesses of Vancouver’s housing market. The CEO of Scotiabank spoke out in support of a luxury sales tax. The deputy chief economist at CIBC supports a ‘flipping’ tax as a measure to reduce speculation. I support both these tools and will continue to aggressively advocate for them to the federal and provincial governments as a way to help create a level playing field in the Vancouver housing market.
My favourite thing. I got to work for a month on a story about how commuting is changing (or not) in the Lower Mainland.
It was an eye-opener.
I heard a lot of stories about how people make their transit choices with factors I hadn’t thought about. Childcare is key. (Living close to a daycare where you got in or grandparents is like a life-or-death thing.)
Having a bus route that you relied on get altered means choosing a car over transit. Having a great transit option is the best part of some people’s days. And, for some, the chance to live in a place close to nature seemed to compensate for the most horrible commutes imaginable.
Then there are the big factors. Like what is going to happen to millennials as they abandon the craft breweries for marriage and kids.
And the nerd factors. Like, what do local planners look at to try to figure out how to tip a few more people in the region into taking transit.
I won’t rewrite all 4,000 words here. Instead, here’s the link to my BCBusiness story, which I guarantee will make you think twice about how commuting works in this city.
I will admit straight up that I don’t fully understand the negotiations going on between the province and cities over how they will come up with their $370 million to match the $370 million the feds are willing to put into transit locally from this year’s budget.
I had a long interview with Minister Peter Fassbender, where he said the province is doing everything it can to make sure B.C. and Vancouver get that money. But I didn’t hear any sign of him moving away from the province’s longtime position that it will only pay 33 per cent of any infrastructure project. And the cities are saying they won’t go past 10 per cent.
The minister and premier have been floating the idea that somehow the shortfall could be covered by getting money from a new development charge on projects that go up near transit lines. That might have been an excellent idea for Burnaby and Coquitlam, which are growing towers like mushrooms near the new Evergreen Line.
But mayors say the same kind of development is not going to appear along Broadway, which is already zoned for high density, or Surrey. There will be some medium-rise development along its light rail, but likely not towers.
My Globe story on this is here, but my guess is that there is much more vigorous shoving and pushing going on behind the scenes that what is on the surface.
I also hear from several sources that the province seems to be trying to say to the cities, Just come up with the money for Phase 1 (this year’s $370 million) and we’ll work out the details for Phase 2 later.
And the mayors are saying back, No, it needs to be settled all together and now.
People who have worked on housing issues for decades haven’t seen this much fear and anxiety about housing in Vancouver ever. When it was just working-class people and the homeless who were having trouble, there was a kind of low-grade concern.
But now that middle-class people working two decent jobs feel like they’ve been priced out of everything except condos in Vancouver and even Burnaby and North Van,the desire to change the system is palpable.
That has various individuals and groups jumping in to make recommend actions. We heard from the UBC and SFU professors a few months ago. Now the Canadian Centre for Policy Alternatives has come in with its recommendations (much broader than just a vacancy tax), a group has formed to pressure all political parties on housing in the lead-up to next year’s provincial election, and two individuals have started petitions asking the federal government to take action (links here and here).
I’m waiting to see, myself, how this all coalesces. The Code Red/Generation Squeeze group isn’t making any specific policy recommendations yet, so as not to get people dissipating their energy on whether this technical detail or that one is the best strategy. Groups like CCPA are making big, broad recommendations that are actually more focused on getting governments to put money into lower-cost housing than on stopping foreign investment. And the resident petitions are focused exclusively on the foreign-investment issue. (One even suggests getting rid of the provision that allows Canadians to register as non-residents and not pay taxes — something that won’t please Canadians who have decamped to Mexico and Thailand to avoid taxes until they need to come back for healthcare.)
My Globe story here.
But to be effective, all these groups will need to sort out a specific change they want, otherwise governments will just allow them to dither amongst themselves. I await.
No wonder Vancouver is always in an uproar about some development or another. There’s just so much of it in the city, as I was made aware when someone pointed me to the statistics on housing starts in the region.
Vancouver, in spite of being an almost built-out city and with very little greenfield (never built on) land available, has the most residential construction going on of any municipality, and by a long shot. So far this year, 3,500 units under construction in the city, compared to 1,400 in Burnaby, 900 in Surrey.
That’s because development is Vancouver is so much more certain — for sure, everything will get sold and, for sure, it will be for a good price. Which is what is making the city eternally attractive.
My story in the Globe on all this here. The CMHC report here. And an invaluable source for all things housing, the Metro Vancouver Housing Data Book, here.
Huh, never seen this before. The city is really being pushed into doing something. I’ll be curious to see what happens next.
May 13, 2016
Heritage Inspection Order issued for 1550 West 29th Avenue
The City of Vancouver Director of Planning has ordered a heritage inspection of the property located at 1550 West 29th Avenue, for the purposes of assessing the heritage value and heritage character of the property, and to help determine whether it merits heritage conservation.
The action was taken in order to evaluate the home’s potential historic significance: this Tudor-style home built in 1922 was the first Western Canadian house used as a show home to demonstrate the use of modern electricity in homes. This is the first time a Heritage Inspection has been ordered by the City, as a new tool enabled by the Heritage Procedure By-law approved by Council in September 2015.
“We heard very clearly from the public their concerns regarding the potential loss of the historic ‘Electric House,'” says Mayor Gregor Robertson. “Granting temporary heritage protection to this property is an important first step that gives the City time to properly assess its heritage value and character, and I look forward to staff reporting back later this month on next steps.”
This order is being issued pursuant to section 7.1(c) of the Heritage Procedure By-law, No. 11350 and section 583 of the Vancouver Charter and will remain in effect for no more than 30 days.
While the property is subject to this order, it is also subject to temporary heritage protection afforded by section 591 of the Vancouver Charter, which means that a person must not:
(a) alter the exterior of a building;
(b) make a structural change to a building;
(c) move a building;
(d) alter, move or take an action that would damage a fixture or feature identified in the authorizing resolution, order or by-law for the temporary protection; or
(e) alter, excavate or build on the property
unless this is done pursuant to heritage alteration permit.
Staff and heritage consultants will undertake a heritage inspection and the results will be presented to City Council in a public report on May 31, 2016 at City Hall.
The house at 1550 West 29th Avenue is not listed on the Vancouver Heritage Register; however, it is one of the sites nominated as part of the Heritage Register upgrade currently underway as part of the Heritage Action Plan. It was built in 1922 and was designed by architects Townley and Matheson who also designed Vancouver City Hall. The house was built as a show home by the Electrical Services League of BC to demonstrate to the public the “convenience from a house being properly and adequately wired for electricity.”
The Heritage Action Plan (approved By Council in December 2013), includes actions related to updating the City’s Heritage Conservation Program, the Vancouver Heritage Register and completing the character home zoning review. Consultants and staff are reviewing options to encourage heritage and character home retention and will begin public consultation next month and continue through fall 2016.
Metro Vancouver is unique among North American cities when it comes to farmland. It has more farm-designated land in its boundaries than any other North American city. And that land, when it is farmed, is very productive.
Metro Vancouver farms have the highest “farmgate” revenue of anywhere in the province, due in part to their proximity to a big pool of people eager to buy at farmers’ markets or from farms directly.
But half of the 6,700-some parcels of ALR land in the region aren’t farmed. A quarter can’t be, because they are golf courses, road allowances or whatever. But the other quarter is sitting unused because the people who own those parcels have decided they make wonderful country estates or other non-farm uses. (The Vancouver Sun’s Kelly Sinoski did a story five years ago about the disturbing trend of mega-manions on farmland.)
Now, Metro planners are trying to come up with some tax changes that might encourage more farming … and discourage people who claim they are farming, but are producing so little revenue that they seem to be in the business mainly for the hefty tax benefits available if their land is classified as agricultural rather than residential. Changes are a ways off. A report Friday outlined some strategies, which I covered in my story here.
There’s more to come in the next few months.
I heard that a Chinese private school was looking to partner with the local school board in Powell River to start a new kind of venture, where the Chinese company would build a school and dormitories for 400 students while the district handled all the teaching.
That was interesting enough. But once I started calling around to get more information, I found out there was so much more going on: another Chinese investor, another piece of property and talk of joint programs with the local university satellite campus; a shellfish hatchery just opened by still another Chinese investor; and Chinese entrepreneur immigrants coming in to the community through the entrepreneurship program.
My story that sketches out the bare bones of this is here. I imagine there will be more to come in future.
I think we have no idea at all what kind of change is going to be wrought on this province by these investors from one of the world’s biggest economies, who seem to have a fascination with the province equivalent to what the Germans do.
I know this crowd will want to weigh in. Announcement from city below.
The City invites residents to participate in a public survey to seek their opinion on possible government actions to discourage empty homes in Vancouver.
Following the City’s study on empty homes in March 2016, which showed 10,800 homes in Vancouver left unoccupied for a year or more, the City conducted research with local housing, real estate and public policy experts into potential actions to decrease the number of empty homes.
The survey asks for public opinion on these actions, including taxing short term investors, prohibiting strata restrictions on rentals and increasing property taxes for unoccupied homes.
The City has limited tools to discourage empty homes, so partnership and support from the BC government are critical to the next steps. Public opinion about the need for action will be an important part of the request the City presents to senior government. Under the Vancouver Charter, the City does not have the power to mandate occupancy.
The online questionnaire launches today at vancouver.ca/housing<http://vancouver.ca/people-programs/housing-and-homelessness.aspx> and will be open for responses until May 16, 2016.
Responding to public concerns that empty homes could be impacting housing affordability and neighbourhood vibrancy, City of Vancouver staff presented the findings of a comprehensive study on unoccupied homes to Council on March 8, 2016.
The findings of the study, which looked at 225,000 homes in Vancouver, showed that:
* The percentage of unoccupied homes has remained steady since 2002 – about 4.8 per cent for all housing types.
* Looking at data from 225,000 homes, a total of 10,800 homes were empty for a year or more.
* Of all the empty homes identified, 90 per cent were condos and apartments.
* The percentage of empty single-family and duplex properties remains the same as 2002 at around 1 per cent.
* Census data shows that the percentage of empty apartment and condo units in Vancouver is about the same as other large Canadian cities.
The full presentation on empty homes can be found here: http://council.vancouver.ca/20160308/documents/rr1presentation.pdf
The consultant report on empty homes can be found here: http://council.vancouver.ca/20160308/documents/rr1EcotagiousReport.pdf
I think many of you saw this fun piece by Ian Young at the South China Morning Post about the interesting doings with two Nelson Street properties, purchased by Bruno and Peter Wall just two years ago and recently sold for $68 million to a new player in town, Gao Shan.
Ian’s style can be very entertaining and swashbuckling — reminds me of the style of William Randolph Hearst’s reporters at the New York Journal in the rambunctious days of early commercial journalism. And kudos to him for getting hold of the new buyer and also interviewing the Walls’ sad-sounding architect about the building design he created for them, which now looks to many as though it was just window-dressing prior to a sale.
But I was hoping that in the Twitter/blog discussion elsewhere that a couple of questions would be answered, but that hasn’t happened, so I’ll put them here.
What really is the role of Suncom in all of this? This is the company that was advertising “crowdfunding” opportunities for both the Molson Brewery site and these Nelson Street sites on social media a few months ago, which various reporters wrote about. Yet the Molson Brewery site ended up in the hands of Concord Pacific and it looks as though it went straight from Molson to Concord with no intermediary, in spite of whatever Suncom was advertising.
With the Nelson Street sites, Julia Lau, who has been with Suncom in the past but it’s unclear what her role is now, also appeared to be soliciting investors, as I wrote in a story a couple of months ago. Some sharp-eyed people got screen grabs of her Facebook posts saying the following.
Julia Lau –
“The new project we just bought is 1065 Nelson St., Vancouver. Located at Burrard Corridor Area “E”. lot size is 17,292sf ( 130 x132 ), two appointments building with 50 units. Net income is $470,000/year. The SFR is 2.75 now but potentially could be up to 24.3. It could built up to 58 floors new apartment building potentially. Whoever want to invest has to prepare the deposit with bank draft tomorrow. The shares will be sold out on Monday.
The previous project we bought with $103 million at 14140 Triangle Road, 14300 Entertainment Blvd, and 14111 Entertainment Blvd Richmond on May 22, 2015, the shares were sold out in one week.
The $30 million projects at 5826 & 5860 Tisdall St Vancouver’s shares were sold out in one day on Feb 21, 2015.”
“The $60 million dollars project at 1065 Nelson St Vancouver’s shares sold out in two hours! Thank you very much.”
So Lau’s posts claimed that the project sold out. But did it? We have no evidence that anyone invested. Lau hasn’t returned calls to anyone in a while and no investor has ever appeared to talk about what a good investment she or he made.
What is that land really worth? There are two apartment buildings, one at 1059 Nelson, the other at 1075 Nelson. The Walls bought the two in February 2014 for $16 million, though the 2015 assessment put the value at only about $14 million for the two. Gao Shan bought for $68 million, which makes it look as though he paid stupid money and the Walls made out like bandits.
However, since the time the Walls bought and now, the city passed the West End plan. That plan envisions much taller towers being allowed in the block next to Burrard, i.e. right where those two apartment buildings are. (Actually, my question 3 is, what did the Walls know when they bought those apartments back in February 2014, before the West End plan was passed.) Note: My mistake. The West End plan was passed in November 2013, as per CityHallWatch note. But I do wonder if the sites were optioned before. Their purchase price seems low, as though the owner didn’t know about potential rezonings.
Developer Bosa recently bought out all the condo owners of a building nearby (1060 Barclay) for double the assessed value on their units, precisely because of the additional density the West End plan will allow. There were 56 units in the building. One unit that I looked up had been bought by Bosa for $608,000 when it was only assessed at $354,000. If you multiply 56 times $608,000, it comes out to around $34 million. And some units may very well have been worth more. Note: David Taylor says Bosa bought 1070 Barclay, next to 1060, for $59 million. Also in the rezoning zone.
So developers are clearly willing to pay extra in that area, based on their expectation that the city is going to allow much high density in that block between Burrard and Thurlow. The Walls had proposed a 60-storey tower in their pre-application open house.
But I don’t know enough about the potential for that site and the buildable square feet that might be allowed to know what that $68 million will work out to on a per-square-foot basis.
The city also does require that 25 per cent of the units on that site be for social housing, which is definitely going to cut into the profits. And, from what I understand, the buyer has already made a couple of clumsy moves at city hall. I can’t imagine this process is going to go smoothly for him.
I look forward to your analysis.