Peter Ladner interviewed by David Berner on Shaw cable television, 25 (?) May 2011. Thoroughly worth watching.
Excerpts from an early section of the interview:
Ladner: “Is it always a good thing that property values go up? The papers, the news: ‘Property values up – Good Thing; Property values down – Bad Thing’ … when you start to look though, at what happens in an ‘insanely hot market’ – which is how one real estate agent described this one – you can start to identify some bad things about property values being too high. … It erodes the economy of the city, because businesses can’t hire people. … Mining company CFO, six figure salary, cannot afford to buy a home in Vancouver. Another story about a couple, both surgeons, cannot afford to buy a home in Vancouver… Stories about companies that want to expand, they need workers, they can’t find them.. the young people can’t afford to live here… They recruit people from TO or Seattle or wherever, the people take one look at the housing market and say they can’t afford to move here, so now the company is thinking about moving to Waterloo… We have a declining number of head offices in Vancouver. …
You’ve also got a dividing rich and poor thing that destabilizes the society and leads to all kinds of unpleasant consequences… and new immigrants who want to move here, work hard, – it can’t happen…
If you’re in the market you are a multi-millionaire so there are a lot of people who love it this way and put a lot of pressure on to keep the ‘good things’ coming… but I think it’s time to look at the downside of it and say.. are we actually losing? … You get a resort town, it’s all hollowed out, there’s a few fancy people at the top, and a few serving them at the bottom, or a lot serving them at the bottom, coming in from Langley or wherever it is, crunched together in some little condo or basement suite, and you’ve got no real vibrant city… artists can’t live here, you don’t have a real community, and young people are leaving, and we spend all this money educating our kids and then they’ve gotta take off.. we lose all that money…”
A few thoughts:
Both Ladner and Berner raise some good general and specific points, and the whole interview is to be recommended to anybody concerned about the Vancouver RE market.
Most central to their discussion, Ladner expresses the desire to open a dialogue on possible restrictions to property ownership by off-shore buyers. He argues that lack of restrictions makes local RE a speculative asset for these investors and results in property being unaffordable to locals. He also emphasizes a “hollowing out” of communities that occurs with absentee owners.
Early in the interview, in the section excerpted above, Ladner also challenges the apparent broadly accepted wisdom that rising RE prices are a good thing, and he describes the dangers of becoming a “resort town”.
Later he makes excellent observations about the lack of dialogue on real estate issues being the result of so many vested interests. Both he and the interviewer point out that they are each sponsored, or have in the past been sponsored, by the RE industry! (“The biggest industry in this city is real estate.”)
Both Ladner and Berner agree in passing that even if foreign ownership was curtailed, they wouldn’t expect property prices to fall much at all, and that the city would still remain unaffordable to many. This is a very important point. It partly challenges the rationale behind Ladner’s concerns about foreign ownership in the first place. We think that it could be argued that both Ladner and Berner are avoiding the elephant in the room, namely the existence of a very broad and deep speculative mania, and the related very high risk of a price crash. It would be interesting to see either Ladner or Berner challenged on their price-resilience assumptions, and to be asked to consider the issue of local speculation. Ladner does at one point acknowledge that the source of the high prices may be related to interest rates.
So, we share Ladner’s concerns about the effects of overly expensive real estate on the community, he states many of them eloquently, and he should be applauded for publicly speaking out. We disagree with him, however, regarding the major cause of the insanely high prices: the cause of our housing bubble is inappropriately cheap financing/loose lending combined with local ‘speculative’ buying (a speculative component to almost every purchase), rather than off-shore ownership (which is important in its own right but far less so than local speculation).