The Mayor – “When mortgage and rental costs eat up the discretionary income of a large swath of our population, it depresses spending in the local economy. When our communities start losing young families and seniors on fixed incomes, we lose vitality and a sense of generational continuity. Unaffordable housing is damaging Vancouver’s community fibre.”


“…each street will be about this wide…”

“Nearly every day since I became mayor, I’ve heard from family after family and business owner after business owner about how the high cost of living impacts their lives.
One day, it might be a young couple whose second child is on the way, and who’ve decided it’s time to buy a home. And they’ve come to the conclusion they simply can’t do it in Vancouver’s housing market, and they’re planning to move to the Fraser Valley.
The next day it might be a senior, someone who can tell me the names of the families who’ve lived on their block going back half a century … but with a fixed income he just can’t afford to stay in his neighbourhood.
I’ve spoken to people in deep distress because they hold down three jobs and it’s still not enough to make rent. I’ve talked to owners of major companies who can’t fill positions because their workforce is leaving the city for somewhere more affordable.
And I lost count a long time ago of the number of people who just laugh off the idea of ever owning a home here.
The lack of affordability imposes a burden on everyone. When mortgage and rental costs eat up the discretionary income of a large swath of our population, it depresses spending in the local economy. When our communities start losing young families and seniors on fixed incomes, we lose vitality and a sense of generational continuity.”

– from ‘Unaffordable housing is damaging Vancouver’s community fibre’, by Mayor Gregor Robertson, Vancouver Sun, 8 Oct 2012

Bingo!
Interesting that anyone is capable of writing anything at all about Vancouver housing without mentioning the pachyderm squatting on the coffee table: the speculative mania, the bubble, preposterously overvalued homes; whatever you want to call it. Homes are overpriced by a factor of two or three.
Let’s wait and see what happens to affordability once home prices drop to the vague vicinity of those determined by economic fundamentals. There will still be challenges, but they’ll be very different from the ones that people are pretending to try to solve now.
– vreaa

36 responses to “The Mayor – “When mortgage and rental costs eat up the discretionary income of a large swath of our population, it depresses spending in the local economy. When our communities start losing young families and seniors on fixed incomes, we lose vitality and a sense of generational continuity. Unaffordable housing is damaging Vancouver’s community fibre.”

  1. If Robertson wants to do something then the COV should base property taxes on residency and charge a non-occupancy tax…

    No one occupying the premises (either rental or primary residence): 2X regular taxes.

    Non- BC resident: 2X regular taxes.

    Non-BC resident owns non-occupied residence: 4X regular property taxes.

    That will help affordability.

    PEI and other jurisdictions charge a premium to non-PEI residents differential, why can’t we?

    • West Coast Woman

      Neither the City nor the Province want to stop the real estate bubble party, since both Vision and the BC Liberals get a substantial portion of their campaign contributions from the real estate development industry. That’s why they won’t even look into the effect of foreign ownership on the housing market. Thank goodness OSFI is doing this.

      The City has made the problem of affordability much worse by their interference through EcoDensity and other policies. By allowing much larger houses to be built on every lot, they virtually guaranteed that older, smaller, more affordable houses would be demolished to make way for these new Plywood Palaces. By developing the Cambie Corridor Policy (effectively rezoning the whole street) they created rampant speculation that drove up prices of all the houses in that area. By allowing laneway houses – effectively 2 houses on every single family lot, they made single family houses even less affordable for most families.

      This “affordable housing” policy is just more of the same to give the developers even more of the City to demolish. You’ll note that the two people behind Gregor Robertson selling this policy – Mike Harcourt and Michael Geller – are the same two people that Council sent out to sell EcoDensity in 2008.

      I really hope this bubble crashes hard so that none of these planned developments get off the ground. I’m so sick of developers ruining this City and its affordability for the average family, replacing good housing with tiny, expensive, poorly built suites.

  2. 4SlicesofCheese

    When prices are down 50% in Vancouver, I wonder if mayor will be applauded for his taks force.

    • The task force will be pretty much forgotten..
      …and there will be far more important fish to fry (such as the strained economy and tenuous tax base).

  3. “When mortgage and rental costs eat up the discretionary income of a large swath of our population”

    So prices AND rents are high. Vancouver’s affordability crisis is a much tougher nut to crack than just high prices!

    • Rents are low in terms of prices, but they are still a little on the rich side given local incomes. As we’ve all discussed before, it’s counter-intuitive, but we wouldn’t be surprised to see rents dropping along with prices (but not nearly by as large percentage amounts), such that the fundamental value of homes determined by rental income drop even lower than the low numbers we’re currently estimating.
      Economic weakness, unemployment, collapsing households, provincial outmigration, are just some factors that can put downward pressure on rents.

      • I doubt rents will drop much, even in markets ravaged by oversupply worse than Vancouver’s. Rents tended to increase at about the rate of inflation, albeit with some moderation post peak.

        Using $/sqft for sales and rentals is a good method, but I don’t have a good way of getting this other than spot checking craigslist.

        Funny, because rented accommodation portion of CPI is dropping in real terms.

      • Renters Revenge

        Rents will go down with increased rental supply.

      • “Rents will go down with increased rental supply”

        Based on evidence from other jurisdictions that have seen significant house price crashes there is not much to indicate to me rents are going to significantly weaken, at least relative to incomes. Maybe Vancouver is different.

      • Relative to average income, Vancouver rents are very high. Relative to Calgary, Vancouver rents are only relatively higher but it’s cheaper to buy in Calgary than rent. Relative to buying in Vancouver, rents there are ridiculously cheap. HAM still hasn’t figured out that outside China a good investment is supposed to have a postive return.

    • I haven’t found any data that suggest a major change in rent prices as a percentage of incomes. Chart What’s been sacrificed to keep rents low is smaller new units, which for developers means more profits.

      This man is a delusional puppet that is being told what to do. Read post #231 on Garth’s blog to see who’s really calling the shots.

      • Thanks.
        So, rents are up, but only if considered per sqft.

      • The chart shows rent as a percentage for unattached individuals’ income rise , but this was due to an income decline of $33,800 in 2009 to $30,300 in 2010. Nominal condo rents remained unchanged (more or less) depending on the data you use, but to answer your question: the reason rents have moderated while recently prices have soared is because new homes have been shrinking faster then ever. Chart The chart is for GTA but I assume the same is happening in Van. Developers all think alike.

        The mismatch here is how landlords haven’t increased rents relative to price appreciation. Why? Because the renter is not willing not pay more out of his or her income to rent, but was willing to live in a smaller space in exchange, therefore, landlords settle for rents to cover mortgage payments while returns are made on home appreciation. It is the landlord who’s been paying a high price per sq.ft., not the renter.

        In the case for builders, building costs have risen dramatically over the past ten years, so instead of raising prices, they build smaller units. Why? Because the buyer/landlord was willing to pay that much for it, after all, all they cared about was rent covering mortgage payments while prices continued to go up.

        I use a term called ‘optimum affordability range’ which is like a benchmark for rent and mortgage payments between $1400-1800. The development and lending industry caters and builds homes with this price range in mind, since for the longest time (as shown in the chart), this range is what the average renters and landlords are willing to pay as a percentage of the income. What has really changed (or exchanged) is the value, i.e. land size, property size, quality, etc.

        At some point over the last few decades, people lost their sense of value and starting basing their wealth on prices rather the the physical asset (value). The more who believed this notion—the more society degraded itself.

      • West Coast Woman

        He may be a delusional puppet, but he also seems to be an extremely arrogant one.

        Unfortunately, a lot of people appear to have voted for him based on his looks and his ability to greenwash everything he does.

      • Just to put it into prospective: lenders and developers work hand-in-hand to get the price right for buyers, but now that rates can’t go lower, there is more pressure on developers to shrink units. Of course, this stops when the buyers say no to tiny units, so the government’s job is to deregulate laws and find more people to say yes. That’s what’s happening in a nutshell.

      • ” rents are up, but only if considered per sqft.”

        And so what if accommodations are getting smaller? Renters can almost certainly do the calculations on rent based on square footage because they have to live there. If they choose to pay high rents for a smaller space who am I to say they’re out of it? This is a far more complicated issue to solve than prices being misaligned from rents; measurably affecting the rental market is a whole different kettle of fish, but as a commenter a few days ago noted, dense housing is not necessarily affordable but affordable housing is almost certainly dense.

        That may be explaining some of the discrepancy between the CPI reported rented accommodation and CMHC rental survey data. CMHC data mostly track same unit rentals (using mostly purpose built stock that has been mostly unreplenished in the past couple of decades). On that measure rents are increasing above inflation. This aligns well with my own experience of rent increases and experiences of other pro landlords I have conversed with over the past few years.

        It would be an interesting thing to determine if Statscan is hedonically adjusting rents for size, it would explain at least part of the discrepancy.

      • >Unfortunately, a lot of people appear to have voted for him based on his
        >looks and his ability to greenwash everything he does.

        I voted for Robertson, but only because Suzanne Anton was clearly worse (i.e., even further in bed with developers), and the COPE guy had no chance. The only possible good outcome of the election would have been Garossino being elected, but even that didn’t work out.

  4. Gregor = our cities top psychopath.
    “Thin” streets will be great for bikes. 🙄

    • West Coast Woman

      May his latest green scheme go down in flames – before he makes a worse mess of things than he already has. Perhaps that’s why the non-Vision councillors are no longer allowed to see the City’s budget and spending data – so Vision can keep secret how bad their management of the City’s finances really is.

      • One of the mayor’s latest schemes has been totally ignored by the press. Apparently the good citizens of Point Grey Road are “terrified” of the traffic on the street they knowingly bought on and have convinced the city to close off Point Grey Road at Macdonald and turn it into a bike lane up to Alma. Traffic will be diverted over to 4th, parking on 4th will be curtailed but peace will be restored to the 1%. Traffic counts have been done, studies received and by all accounts, the plan is a “go”.

  5. 4SlicesofCheese

    http://www.vancouversun.com/business/Face+vancouver+going+affordable+everyone/7354779/story.html

    “With billions of people around the world seeing the beauty of Metro Vancouver, it’s impossible to build housing to satiate the demand and thus decrease pricing.”

    “Demand will not diminish and supply cannot keep up – prices will rise. I have long ago come to and accepted that conclusion.”

    Audey Korpus didn’t get the record low sales memo.
    Also, can anyone get a column these days?

    • “Can anyone get a column these days?”… Pretty much, 4Slices – the predominant factor being will you write it for free… TeeHee… Now, let’s delve more closely into ‘SunColumnist’ Korpus’ RE chops…

      Hmmmm…. [from LinkedIn]….

      *****************************************
      Audey Korpus’ Summary – More than 15 years of experience with national and international organizations in roles focused on Marketing and Product Management: Strategic Planning, Product Lifecycle Management, Branding, Lead Generation, Partner & Channel Programs, Tradeshows/Special Events, and Business Development. A natural talent for developing and leveraging relationships to grow successful businesses.

      Industry Experience:

      – Solar Energy & Renewable Energy
      – Embedded Systems
      – Green Technology & Clean Technology
      – Power Electronics, UPS
      – Oil & Gas
      – Specialty Coffee & Pastries

      Specialties
      – Strategic Marketing & Planning (B2B)
      – Product Management
      – Business Development
      – Partner Programs
      ******************************************

      Missing from the linked in profile was Audey’s most recent prior position selling sleeping bags at MEC – which, come to think of it, makes rather a lot of sense for someone who resides in PortMoody and has resigned themselves to sleeping outdoors when not marketing solar panels and inverters to the peripatetic dispossessed/homeless of GreaterVancouver….

    • Funny stuff 4Slices. Billions of people? Holy crap where are they all going to live!?!

    • “With billions of people around the world seeing the beauty of Metro Vancouver it’s impossible to build housing to satiate the demand and thus decrease pricing.”

      This is just so ridiculous… unbelievable.

      • I’m pretty sure that if I wasn’t a Canadian, I’d probably rarely, if ever, even think of Vancouver.

        And if I was not a North American, the city would likely not even cross my mind.

  6. For years, I have been discussing the long term social implications of Vancouver’s housing market with a friend in the city. Statements like the mayor’s were just a matter of time and were destined to play out. Being an ex-Vancouverite, the overall well-being of my family are far higher than they were living in Vancouver. Not to mention, our jobs pay double what they would in Vancouver.

  7. Even if/when housing costs go down; Vancouver is finished. All of the business and talent have already been successfully driven out of the city. Hey morons, it’s called CAPITAL FLIGHT, you may want to look it up.

  8. Let’s wait and see what happens to affordability once home prices drop to the vague vicinity of those determined by economic fundamentals

    I think you should replace the word “once” with “if”. There is no guarantee that it will happen in our lifetimes.

    • As sure as the sun rises in the morning, prices will eventually coincide with fundamentals.

      • Robert Dudek

        I don’t need to remind you of what “eventually” means (but I will): sometime between now and the end of the universe.

  9. Cranston Snord

    TOO F*CKING LATE GUYS.

    Vancouver is broken. You broke it with your own greed. You made real estate speculators and developers interests appear to be eco-density and a new Vancouver special version of urbanism.

    See you in a generation when things are repaired. I’ll be moving to Seattle or Portland in the mean time.

  10. There will still be challenges, but they’ll be very different from the ones that people are pretending to try to solve now.

    Perfectly said. “Pretending” to solve problems is exactly what politicians have been doing. Grants for downpayments in Saskatoon. Not-for-profit corporations helping people to use their “future equity” as today’s down payment in Calgary. Tax credits for first time home buyers both federally and in BC. And endless rhetoric about “helping working families become homeowners” and similar platitudinous nonsense.

  11. While I’d written to and phoned Council to say exactly the same things, I had given up on anyone from City Hall speaking out quite like this.

    Early on, I used to wonder why the topic wasn’t constantly front and centre.

    I really hope this latest accurate assessment of what’s really happening in Vancouver is not coming just as the crash is becoming much more widely viewed as not only inevitable but already in progress. Has City Hall finally realized that the development party may be over and the apocalypse is here?

    Am I too cynical when I wonder if City Hall spoke out like this because now housing prices will go down anyway? Before this, was there just too much money to be had by letting the city be bought and sold, no matter what it did otherwise to the city?

    Maybe it’s easier for this to be a less politically “divisive” issue now for Council to address so frankly, in terms of who wins (local developers or the 99%) because developers are going to be in trouble now anyway. And now that Immigration Minister Jason Kenney has also taken steps to reduce investor immigration from abroad, and there seem to be fewer of those customers to offend, perhaps it’s not the “political suicide” it was once considered to make these comments. Or maybe City Hall’s finally looking hard at data about Vancouverites fleeing.

    If the Mayor has been hearing these things since he was elected, I wish he had been saying what he’s saying above since he was elected. I’m glad it’s being said at all.

  12. What a laugh. If the mayor was seriously interested in affordable housing, he wouldn’t be allowing older homes (most with affordable basement suites) to be torn down in favour of gawdawful, limestone tile clad monstrosities that sit empty most of the year! Maybe he should go back to his unending task of “solving” the homeless problem.

  13. Pingback: Real Estate: Vancouver Mayor. |

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