Newsletter April 21, 2022 – What does all this mean?
The Federal Government has just realized that foreign buyers and speculators are a big part of the housing affordability crisis. As a result, the prime minister has stated that the government “intends to impose” a two-year ban on foreign ownership however, this will not include foreign workers and students.
Taking into consideration that this is a promise to the future into a federal election year, why has it taken so long (decades) for governments to recognize that allowing the housing market to be an “investment vehicle” has been one of the fundamental causes of Canada’s housing affordability crisis? Unfortunately, even if this “intended” corrective action is ever put into practice, it is closing the door after the horse is long gone.
What’s the government's sudden interest in, as the prime minister explains it, “We will go after those treating housing as an investment vehicle”. Although he provides no timeline or detail, he is, along with the province, hanging his hat on more supply. However, if land costs have already been driven up by investors, and with hundreds of thousands of people entering the country annually, how will housing supply built on expensive land be an affordable solution?
The academic community has already stated this ”intended and limited” foreign ownership buying restriction is too little, too late. They say increased land costs are the real factor in the housing crisis and decades of unchecked foreign land acquisition in our major cities have played a big part in shutting many Canadian residents out of their own housing market.
Patrick Condon, a professor of urban design at the University of B.C, and one of the most vocal opponents to the government's recent housing approach has stated “research has proven supply as a solution is not the answer.”
He has pointed out, “More recently, I’ve come to understand that the problem isn’t the building, it’s the land underneath the building. When we encourage new density unfortunately it doesn’t help the renter or the home purchaser, who it really helps is the land speculator” (more information and Times Colonist letter Appendix #1).
Vancouver’s Chief Planner, who departed in March 2021 with a hefty severance stated, “the ground shifted under the development community’s feet in 2019-2020.” He said, “The high-end strata market tower form has completely disappeared for them. That was their bread and butter. Rental is of interest, but it has its own financing challenges and equity requirements attached to it. It's a different kind of developer than the standard strata developer. So they've seen huge market shifts….” See in Link Appendix #2 which includes a partial view of what the Investment Industry looks like.
It is becoming more and more obvious that the new development paradigm shift is to densify single-family neighbourhoods. Removing single-family zoning opens the door to allowing multi-dwellings though out the community and a windfall for developers and investors. If towers have reached capacity what is the plan when our cities are completely densified?
Oak Bay Watch Perspective
Oak Bay Council has been singled out by the provincial government’s housing minister David Eby as standing in the way of housing affordability. Not withstanding that year-after-year Oak Bay’s reputation and ranking as one of the most desirable and livable places in Canada, it is obvious that land costs, housing and rents will be higher.
Unless Oak Bay builds some form of subsidized social housing, affordable housing in Oak Bay is not a possibility. Even placing families and multiple tenants in basements, garden sheds and garages is not an affordable option given the high rents for this type of accommodation.
Mr. Eby needs to take a good look at the senior governments role and inaction in allowing housing prices and rents to get out of hand. Not supplying social housing for decades while many, if not most of our immigrants are minimum wage workers; and failing to rain in the investment community both legal and illegal, would have been good places to start.
Now he is planning to have municipalities provide more, of what will be mainly, unregulated, substandard multi-tenant housing. Note: Mr Eby has not indicated that he will be providing any funding for the service costs, infrastructure upgrading or new amenities that will be required.
What is also equally objectionable is that he wants to remove civic engagement - the due diligence that protects the public.
More and more supply in all housing forms hasn’t led to housing affordability in Vancouver (see Appendix #1). What it has led to however is more pollution, congestion and traffic gridlock, crime rates, significant infrastructure impacts, high gas prices, high food costs, amenity user fees and higher taxes.
Oak Bay Council members are to be congratulated for listening to the community and for their rationale to recognize the Quest development application had unacceptable impacts and was inappropriate for the single-family site. Councillors Braithwaite, Green, Paterson and Zhelka denied the application based on these factors.
David Eby, the Provincial Housing Minister thinks that a 1000 dollars a square sq. ft. condo development on a single-family lot and placing families in basements is going to help solve Canada’s out-of-control housing affordability problem. If he is not listening to the academic community, and his solution is to depend on the development and investment industries to provide “more-and-more” for profit supply - we are in trouble.
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“Nothing is inevitable if you are paying attention” Oak Bay Watch
Oak Bay Watch is a volunteer community association and its members have a variety of professional backgrounds in both the public and private sector.
*******Please help us continue to provide you with information about Community concerns and Council decisions and actions. Oak Bay Watch members also help community groups with their specific development concerns. Donate to Oak Bay Watch - even $5 or $10 dollars provides expenses for door- to- door handouts and helps us maintain our website. Oak Bay Watch is committed to ensuring the Community gets the full range of information on budget, governance and all key development issues – a well-informed opinion cannot be made without this.
(Please use Donate Button at bottom of oakbaywatch.com Home Page)
Keep informed and sign up for our newsletter – bottom of Newsletter Menu Item.
Appendix #1
Patrick Condon, professor of urban design at University of B.C.
“I think the current shift in the argument is unfortunate because if any place in the world or certainly in North America has tried to reduce home prices by adding supply, that would be Vancouver. Vancouver probably has added more supply as a percentage of its population than any other centre city in North America, and yet our prices have gone up 300 per cent over three decades.”
He cites the example recently of a bungalow at W. 41st Avenue and Cambie Street, on the market for $11-million .It’s explicitly advertised as a speculative investment based on the presumption that the density is going to increase”.
“So for the government to think that a policy which is aimed at encouraging additional density everywhere without constraints is going to fix the problem – it’s going to make the land speculators sing ‘hallelujah’ but it’s not going to help people who need housing.”
Times Colonist Letter April 3, 2022
Housing unaffordability due to a shortage of land
“Our strategy so far in trying to address the housing problem has been a failure because politicians are afraid to address the heart of the problem — land.
Example: Our son was house-hunting shortly before the pandemic, and said: “You know why a house that costs $1.2 million is so much more impressive than one that costs $1.1 million? The $1.2-million house is a $200,000 house on a million-dollar lot, and the $1.1-million house is a $100,000 house on a million-dollar lot.”
What drives the price of housing isn’t the cost of building, it’s the cost of land because so little land is available. About 94 per cent of B.C. is Crown land. Of the six per cent that is not, a significant amount is in Agricultural Land Reserve, even land not remotely economical to cultivate.
Much of the rest is held by hoarders and speculators who let it out in dribs and drabs to keep its price outrageous. The province needs to ease the land squeeze by selling more Crown land into private ownership.
The ALR needs to exclude property that is economically unsound for agriculture.
It also needs to address undeveloped land hoarding, and communities that enforce it. Speculators should be discouraged from sitting on land through massive tax hikes on undeveloped or underdeveloped land. Measures like this will not only help with the housing shortage, they will fill the coffers of B.C.’s government, allowing them to, say, hire more doctors.”
Victoria Resident
Appendix #2
https://policyoptions.irpp.org/magazines/june-2021/the-rise-of-financial-landlords-has-turned-rental-apartments-into-a-vehicle-for-profit/
The Article lists a partial look at the Investment industry:
“The multi-family apartment rental sector in Canada is being transformed by the rise of “financial landlords”:
Huge corporate firms that acquire properties as investment products. They include private equity firms, asset managers, publicly listed companies, real estate investment trusts (REITs) and financial institutions.”
The Federal Government has just realized that foreign buyers and speculators are a big part of the housing affordability crisis. As a result, the prime minister has stated that the government “intends to impose” a two-year ban on foreign ownership however, this will not include foreign workers and students.
Taking into consideration that this is a promise to the future into a federal election year, why has it taken so long (decades) for governments to recognize that allowing the housing market to be an “investment vehicle” has been one of the fundamental causes of Canada’s housing affordability crisis? Unfortunately, even if this “intended” corrective action is ever put into practice, it is closing the door after the horse is long gone.
What’s the government's sudden interest in, as the prime minister explains it, “We will go after those treating housing as an investment vehicle”. Although he provides no timeline or detail, he is, along with the province, hanging his hat on more supply. However, if land costs have already been driven up by investors, and with hundreds of thousands of people entering the country annually, how will housing supply built on expensive land be an affordable solution?
The academic community has already stated this ”intended and limited” foreign ownership buying restriction is too little, too late. They say increased land costs are the real factor in the housing crisis and decades of unchecked foreign land acquisition in our major cities have played a big part in shutting many Canadian residents out of their own housing market.
Patrick Condon, a professor of urban design at the University of B.C, and one of the most vocal opponents to the government's recent housing approach has stated “research has proven supply as a solution is not the answer.”
He has pointed out, “More recently, I’ve come to understand that the problem isn’t the building, it’s the land underneath the building. When we encourage new density unfortunately it doesn’t help the renter or the home purchaser, who it really helps is the land speculator” (more information and Times Colonist letter Appendix #1).
Vancouver’s Chief Planner, who departed in March 2021 with a hefty severance stated, “the ground shifted under the development community’s feet in 2019-2020.” He said, “The high-end strata market tower form has completely disappeared for them. That was their bread and butter. Rental is of interest, but it has its own financing challenges and equity requirements attached to it. It's a different kind of developer than the standard strata developer. So they've seen huge market shifts….” See in Link Appendix #2 which includes a partial view of what the Investment Industry looks like.
It is becoming more and more obvious that the new development paradigm shift is to densify single-family neighbourhoods. Removing single-family zoning opens the door to allowing multi-dwellings though out the community and a windfall for developers and investors. If towers have reached capacity what is the plan when our cities are completely densified?
Oak Bay Watch Perspective
Oak Bay Council has been singled out by the provincial government’s housing minister David Eby as standing in the way of housing affordability. Not withstanding that year-after-year Oak Bay’s reputation and ranking as one of the most desirable and livable places in Canada, it is obvious that land costs, housing and rents will be higher.
Unless Oak Bay builds some form of subsidized social housing, affordable housing in Oak Bay is not a possibility. Even placing families and multiple tenants in basements, garden sheds and garages is not an affordable option given the high rents for this type of accommodation.
Mr. Eby needs to take a good look at the senior governments role and inaction in allowing housing prices and rents to get out of hand. Not supplying social housing for decades while many, if not most of our immigrants are minimum wage workers; and failing to rain in the investment community both legal and illegal, would have been good places to start.
Now he is planning to have municipalities provide more, of what will be mainly, unregulated, substandard multi-tenant housing. Note: Mr Eby has not indicated that he will be providing any funding for the service costs, infrastructure upgrading or new amenities that will be required.
What is also equally objectionable is that he wants to remove civic engagement - the due diligence that protects the public.
More and more supply in all housing forms hasn’t led to housing affordability in Vancouver (see Appendix #1). What it has led to however is more pollution, congestion and traffic gridlock, crime rates, significant infrastructure impacts, high gas prices, high food costs, amenity user fees and higher taxes.
Oak Bay Council members are to be congratulated for listening to the community and for their rationale to recognize the Quest development application had unacceptable impacts and was inappropriate for the single-family site. Councillors Braithwaite, Green, Paterson and Zhelka denied the application based on these factors.
David Eby, the Provincial Housing Minister thinks that a 1000 dollars a square sq. ft. condo development on a single-family lot and placing families in basements is going to help solve Canada’s out-of-control housing affordability problem. If he is not listening to the academic community, and his solution is to depend on the development and investment industries to provide “more-and-more” for profit supply - we are in trouble.
-------------------------------------------------------------
“Nothing is inevitable if you are paying attention” Oak Bay Watch
Oak Bay Watch is a volunteer community association and its members have a variety of professional backgrounds in both the public and private sector.
*******Please help us continue to provide you with information about Community concerns and Council decisions and actions. Oak Bay Watch members also help community groups with their specific development concerns. Donate to Oak Bay Watch - even $5 or $10 dollars provides expenses for door- to- door handouts and helps us maintain our website. Oak Bay Watch is committed to ensuring the Community gets the full range of information on budget, governance and all key development issues – a well-informed opinion cannot be made without this.
(Please use Donate Button at bottom of oakbaywatch.com Home Page)
Keep informed and sign up for our newsletter – bottom of Newsletter Menu Item.
Appendix #1
Patrick Condon, professor of urban design at University of B.C.
“I think the current shift in the argument is unfortunate because if any place in the world or certainly in North America has tried to reduce home prices by adding supply, that would be Vancouver. Vancouver probably has added more supply as a percentage of its population than any other centre city in North America, and yet our prices have gone up 300 per cent over three decades.”
He cites the example recently of a bungalow at W. 41st Avenue and Cambie Street, on the market for $11-million .It’s explicitly advertised as a speculative investment based on the presumption that the density is going to increase”.
“So for the government to think that a policy which is aimed at encouraging additional density everywhere without constraints is going to fix the problem – it’s going to make the land speculators sing ‘hallelujah’ but it’s not going to help people who need housing.”
Times Colonist Letter April 3, 2022
Housing unaffordability due to a shortage of land
“Our strategy so far in trying to address the housing problem has been a failure because politicians are afraid to address the heart of the problem — land.
Example: Our son was house-hunting shortly before the pandemic, and said: “You know why a house that costs $1.2 million is so much more impressive than one that costs $1.1 million? The $1.2-million house is a $200,000 house on a million-dollar lot, and the $1.1-million house is a $100,000 house on a million-dollar lot.”
What drives the price of housing isn’t the cost of building, it’s the cost of land because so little land is available. About 94 per cent of B.C. is Crown land. Of the six per cent that is not, a significant amount is in Agricultural Land Reserve, even land not remotely economical to cultivate.
Much of the rest is held by hoarders and speculators who let it out in dribs and drabs to keep its price outrageous. The province needs to ease the land squeeze by selling more Crown land into private ownership.
The ALR needs to exclude property that is economically unsound for agriculture.
It also needs to address undeveloped land hoarding, and communities that enforce it. Speculators should be discouraged from sitting on land through massive tax hikes on undeveloped or underdeveloped land. Measures like this will not only help with the housing shortage, they will fill the coffers of B.C.’s government, allowing them to, say, hire more doctors.”
Victoria Resident
Appendix #2
https://policyoptions.irpp.org/magazines/june-2021/the-rise-of-financial-landlords-has-turned-rental-apartments-into-a-vehicle-for-profit/
The Article lists a partial look at the Investment industry:
“The multi-family apartment rental sector in Canada is being transformed by the rise of “financial landlords”:
Huge corporate firms that acquire properties as investment products. They include private equity firms, asset managers, publicly listed companies, real estate investment trusts (REITs) and financial institutions.”
