Monday, February 27, 2017

A little more about that 'supply' argument...

As you will recall, in our last post we shared with you the above meme which we found in our in-box.

While it strikes a chord with your faithful scribes here at the Rainforest Roundtable, we do note a slight error in it.  The census data show 26K vacant housing units in Vancouver, not 26% of all housing.

But still... 26,000 is a lot.

The data comes from the 2016 Census which tells us that Vancouver saw a 15% increase in empty and non-resident units.

A "non resident" home is defined as either empty or occupied by a foreign or temporary resident. But most often, the units are empty. Of all the homes in the region that fall into the category, 87% are unoccupied, according to an Urban Futures report.

What agitates the locals is that a large part of the empty-home problem is speculative buying. Particularly speculative buying from foreign money - primarily Chinese money.

In Vancouver's downtown, the Coal Harbour neighbourhood is 22.2% empty or non-resident occupied, and the census tract east of it is 18.2%.

But other, less obvious Vancouver neighbourhoods also show signs of emptiness. Here is a chart showing the impact:

We have been bombarded in the last year with two major themes: the need to increase supply and increasing zoning density - particularly along transit routes.

Now if you know the Village on the Edge of the Rainforest, you are aware of Cambie Street.  Running north/south down the west side of the city, it is a very upper end part of the city.  Vancouver's latest subway, the Canada Line, was constructed underneath Cambie Street and links the Vancouver Airport with the downtown core.

Let's take a look at the south end of that area on this map, it is circled in blue here:

You will note that it has one of the highest percentage of unoccupied areas in the city, particularly the southernmost end.

Drive down Cambie Street today and you will notice oodles of for sale signs as sellers attempt to entice buyers looking to assemble parcels of land. Selling for $3-4 million per house, this is not a cheap prospect.  But once assembled, and rezoned, the financial jackpot is well worth the investment of buying up a block of houses.

Driving this, of course, is the off shore marketing of these properties to foreign speculative money (more on that in a future post).

And nothing epitomizes this speculative frenzy like the deepest red section at the bottom of the map:

This chunk of area is home to the Marine Gateway project constructed around the first Vancouver Canada Line Station as you enter coming from Richmond.  Marine Gateway was highly touted as a showcase solution to Vancouver's housing affordability crisis. Lower end units sold in the $350,000 range and were highly marketed as the new, urban solution for young buyers centred around the transit density development bandwagon.

Problem is that the 2016 Census shows that the Marine Gateway neighbourhood has a 24% non-resident rate (as does Joyce-Collingwood, another subway based urban-oriented transit hub). More significantly there are 609 empty or non-resident units in Marine Gateway Station development.

As noted in the Globe and Mail newspaper,
For many, empty or under-used homes are tangible proof of the commodification, or financialization, of housing. There are those who will argue that an increased supply is necessary to subdue the market, to remove the pressure of scarcity. However, housing markets in what Mr. Yan calls "hedge cities," such as Vancouver, are fuelled by an unprecedented wealth coming from outside. Without addressing the speculative nature of the market, how much effect will supply have?
Marine Gateway stands as a monument to... and proof that... creating extra supply will have no effect at all in dealing with scarcity.

Simply looking at the contrast pictures of downtown Vancouver at the top of this post is visual proof that increasing supply did nothing to resolve affordability by addressing scarcity.

The reality is that the 'supply' argument is a political wedge to leverage municipal politicians into rezoning neighbourhoods so developers can destroy single family homes in favour of condo stock to fuel and profit from the foreign speculative demand.

People are fed up with the pandering currently going on to an industry that only serves to destroy our community. The 'supply' argument is a red herring.  Following the money proves this point.


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1 comment:

  1. read Ross Kay on real estate at Feb 25/17