Without affordable housing, Vancouver risks becoming an economic ghost town
business.financialpost.com
business.financialpost.com
How are property taxes calculated in other places in the world? Vancouver? London? Tokyo?
This is such a hard problem to solve, no one wants to force elderly people to move because of a bull real estate market, but you also need young hard working people in your city for economic growth. My solution would be to jack up the real estate inheritance tax and allocate that money for public transportation and affordable housing.
Although, you can get pretty far into the weeds trying to evaluate the effect of housing stability on political economy - NIMBYism would be expected to be stronger in longer-tenure populations, for instance.
Stability of tax policy is a fantastic thing for encouraging long-term investment.
Here's an example currently for sale:https://www.redfin.com/CA/Los-Altos-Hills/27446-Black-Mounta...
They are paying 18.2k.
If it was reassessed today, they'd be paying 40-45k.
If they do what most people who have lived in a home forever do, and are downsizing to something smaller (IE kids grew up, whatever), they will likely end up with either the same or less in taxes they pay now.
So it's not like right now they pay nothing, and they'd pay a ton, it's "they pay a lot, they'd pay more".
I don't know how much this has to do with the shortage of supply in the bay area but I'd be very surprised if it has "nothing to do" with it.
Imagine a Soviet grey-concrete apartment block. You get on the list when you're 18, and get your "free" apartment five years later, in which you are effectively stuck for the next 50 years. It's illiquid, there is high supply, there are low prices.
Now imagine you can swap apartments by paying a huge bribe. It's still illiquid, there is high supply, there are low average prices, there are high marginal prices.
SF is not a housing market it's effectively a planned communist community with a few bribes on the open market.
This is a problem of housing stock. If you build more housing, it's not going to be occupied by people who've been sitting on it for the last 50 years. That's impossible, because it's new.
This would theoretically deal with the problem of having young couples with many children who can only afford to live in a 2-bedroom condo, because all the bigger housing is occupied by old people with empty nests and the only new housing is 2-bedroom condos or smaller. But, if you're not interested in forcing the old people to leave, it doesn't solve the problem of housing supply -- you'll still need some housing for the old couple and some more, separate, housing for the new large family, and if you don't build additional housing to accommodate the incoming people you'll end up with a housing shortage, regardless of whether old people shift from their existing homes into smaller ones or not. As long as you're building housing for the people who move in, you might as well build it in the sizes they demand.
Inheriting a house doesn't result in a valuation event, and the seller has nothing encouraging them to sell. So, the house sits there empty - They're only paying $100/month in taxes, which is coffee money.
The combination of no capital gains on inheritance, no estate taxes and ancient property valuations creates a multi-generational issue where houses are kept locked up.
1. Rent Control: This forces an incentive not to move. If you are in the 4-bedroom house at $1,500 a month for the past 15 years, a comparable 4-bedroom house is now $6,000. There is no incentive to move and owner's have little incentive to bring up to standard something they are not going to get an ROI on. In this instance, Prop 13 actually makes the situation bearable for the landlords, think if the costs went up and your return stayed static.
2. Building Restrictions: Between the historical board, local populace anger to building, and zoning enforcement, the bay area's supply has been static while demand has increased. There are workarounds, but they border on illegal (i.e. the guy who turned a storage closet into a baby's room for additional space); essentially sub-dividing up existing property.
Within the Bay area, the ability to move a demand curve down has not existed, so the prices have risen to meet the existing supply. Prop 13 has no direct effect on these two items except a positive effect for the landowners in reducing the tax burden that would have forced early bankruptcy for them because of the rent control.
> forces an incentive not to move
Check, if you move your property tax will go up
> and owner's have little incentive to bring up to standard something they are not going to get an ROI on
Check, the "landlord" (government) spending on residential infrastructure won't result in increased property tax income. This is partly why the peninsula cities invest so much in office space but refuse to build housing.
You're right that Prop 13 makes rent control possible, but overall I'm not sure that's a good thing.
Completely false; the Jarvis-Gann Amendment ("Prop 13") has nothing to do with rent control.
You may intend to instead argue that both JGA and rent control provide disincentives to move (and I would not disagree), but that's a different statement.
Rent control existed in many CA cities well before Prop 13 and is orthogonal. The impetus for Prop 13 was that frequent and growing property tax rate (as well as assessment) increases during Willie Brown's control of the Assembly, combined with high mortgage interest rates, were driving longtime residents (especially seniors and others on fixed incomes) out of their homes.
Most rental property owners are not lifelong, continuous owners that benefit significantly from Prop 13, and I guarantee you that those who are aren't giving any rent "discounts" because of Prop 13 savings -- the market (and law) sets the rents.
http://www.nber.org/papers/w11108
(Less churn - opposite of what you hypothesize)
Thus, taxing land simply reduces the flows of rent that can be kept from controlling a location, and thus reduces the purchase price.
This makes it easier for entrepreneurs to acquire land, since the up front costs are lower.
I feel like you could even make a bet on it: There's a nearby trailer park with some mobile homes on it. This should have value solely in the land, since the homes can be removed from the property. I'm counting the availability of utilities in the land. The county tax assessment on both land and improvements is public information. Suppose the tax assessment as a whole goes up 1.7%. If the trailer park owner is able to secure a 1.7% increase over the next year from his tenants, you pay him $10,000. Otherwise, he pays you $10,000. Do you trust Adam Smith enough to take that bet? It should be impossible, since that 1.7% includes an increase of taxes on the land which you're saying cannot be passed onto the tenant.
I am going to be highly critical of an economic research paper that looks at a tax as a subsidy, so here we go:
1. A tax rate lower because of a law than your neighbor is not a subsidy. A child deduction on an IRS form is not a subsidy.
2. The average length of stay for a home owner was increased by .11 years for Bakersfield, 2 years for Los Angeles, and 3 or more year for the Bay Area. Bakersfield, as far as I know, has no rent control, so there is an argument that this is essentially a rounding error. Los Angeles and the Bay Area are rent control cities, no where in the paper is this brought up as an externality forcing the longer periods of tenure ownership.
3. Table 1A shows that rental tenure increased from 4.30 to 5.25 years from 1970 to 2000, this is essentially the same increase as that of 10.76 years to 13.42 years for the home owners; 24.7% for the home owners and 22.1% for the renters. This should invalidate pointing to Prop 13 as the reason for longer owner stays.
4. Florida and Texas pass the same law and the paper simply says, forget them. The two states, Florida and Texas, go on to show that there is no impact from Prop 13, thus further invalidating their study.
5. Not one mention of rent control being a reason why people may not want to move out of their existing dwelling and purchase a home.
This may be a good paper to reference as a point, it is a horrible paper by ignoring externalities, comparable examples, and not examining differences between areas (Bakersfield vs. Los Angeles vs. San Francisco).
Bakersfield is also a terrible place to live, from what I hear.
Its hard to imagine the current real estate inflation in the case where home owners had to pay taxes against the fair market value. In other words, home owners would at least see some value in new construction. As it stands now, there is only downside.
Prop 13 exists in California because that's exactly what was happening. Prior to its passage you paid on the assessed value of you house, and it didn't stop prices from double digit percentage increases every year.
People who'd owned their homes for decades were being forced to sell because the assessed value of the house had gone up so much they could no longer afford to pay the taxes.
Yes, people would have been pushed out as prices increased. But as areas gentrify, there is no guarantee that the farmers and tradespeople who lived there get to stay forever. That's how other markets work.
It sucks to those pushed out, but eventually taxes increase to the point where demand for the area diminishes. Further, since you'd have increased liquidity without Prop 13, people could actually afford to move to other areas so there would be more inventory. As it stands, that isn't happening because people can't afford to move, so the market is locked up. If we didn't have Prop 13, my gut says that the broader Peninsula would not be impacted to nearly the degree it is now (although perhaps SF would because it is so much smaller).
People being forced to sell because their areas taxes increase substantially is an unfortunate, but very necessary thing.
People over 55 can transfer the tax basis of their primary residence. In all cases if they move somewhere in the same county, and depending on local ordinances inter-county.
So retired people living in the Peninsula can afford to move to other areas.
Also, in this case, if the price of your home appreciates, it is likely the price of other homes appreciated, so your gain may not actually amount to anything (particularly after realtor fees). Likewise, you are taxed every year on real estate.
As I see it, the long-term expected costs for a purchaser with an average expected time to hold are neutral compared to an equal-revenue scheme that didn't favor long-term property owners over newer property owners. (Given the same assessed value.)
OTOH, the future costs of holding property are lower compared to the same alternative for current property holders (since, even with a short holding period, some of the early, highest-relative-tax-burden years are sunk costs under Prop 13) under the same comparison.
So, rationally, people are just as likely to want to buy property, and less likely to want to sell it once they've already bought it. This reduces supply and increases market clearing price.
Yes, it does, because it incentivizes municipalities to encourage commercial development (which tends to change hands more often) over residential. It's a classic unintended consequence.
I've heard of things like companies buying businesses outright so they can get the property, without buying the property as a transaction with the other entity.
[1] http://www.sacbee.com/news/politics-government/capitol-alert...
The answer would be a Constitutional Amendment changing Jarvis-Gann protections to residences only, or even primary owner-occupied residences only. But the corrupt Legislature refuses to consider putting an LCA on the ballot to change this.
In Silicon Valley product management there's the saying 'for every yes, there's a thousand no's."
In housing politics for every good idea, there's 100k people who will complain and sue.
The only policies implemented usually fall under the following categories
1) Irrational populism.
2) A backroom deal pushed by lobbyists and their political allies.
Sensible ideas usually don't fall into those categories.
Where I live, you have to be 65+ and own 60+% equity in the home. The problem is that some old rich people are moving in, paying cash for property, and then deferring. They aren't exactly the intended beneficiaries of the scheme.
If you want to tax idle wealthy people, it's simple: tax their investments. This means a stock transaction tax, since so much wealth is tied up in stocks. You can also tax additional real estate properties (i.e. no property tax for a primary residence, but tax vacation homes, rental houses, etc.).
My aunt and uncle used to live in Bronxville, a suburb of NYC (it's part of Eastchester, which is in turn part of Westchester... NY municipal areas are confusing). They moved out in 2003, in large part because they were paying $25k/year in property taxes and they were both retired empty-nesters.
When they told this to me and my mom, we both thought it was insane. I was born in Texas, and my mom has lived in Texas since 1979. I'm not a homeowner myself (I rent a townhouse), but my mom is, and her property taxes in Dallas are around the same as what you paid in London.
This is one of the reasons I intend to stay in Texas for the rest of my life. Northern coastal cities are just completely insane in terms of expenses. New York is a wonderful place to visit, but I'd never live there.
It makes no sense to live there when you have no school age children since you can move a few blocks away in one of the surrounding towns and still have the quality of life.
How are property taxes calculated in [...] London?
The council tax ratios between the bands are fixed - so a band A property always pays one third the price of a band H property. The band a house is assigned to is essentially permanent, although you can appeal if it's not in line with equivalent properties in the same area.
This provides certain desirable properties - more expensive properties pay more, but your bill doesn't go up just because house prices in your area go up.
Disadvantages are your tax bill can still go up - just it goes up for everyone by the same percentage; if an area has become much nicer (or less nice) since 1991, the council doesn't make any more (or less) money; and valuations based on a government employee's estimate of a hypothetical sale don't have the idealogical purity needed to really get the support of voters.
"Europe tells UK to reform ‘regressive’ council tax system": http://www.localgov.co.uk/Europe-tells-UK-to-reform-regressi...
Seems HN group think favours regressive tax?
There isn't really any need for smugness here.
Real-estate taxes on your primary residence is the equivalent of paying rent. It has become so high in some states (e.g. Oregon) that it discourages home ownership.
Georgist taxes have the interesting feature that land rents taxation ( not rack rent, which is what you pay the landlord ) cannot be passed on.
My house is about 10 years old and I pay ~1.5% of it's resale value in taxes annually. Granted, that's much higher than my neighbor who occupies his childhood home built in the 1960s but it's hardly outrageous compared to other parts of the country.
One difference in OR, in addition to selling a home, a significant improvement (ie adding an additional bedroom) can lead to a resetting of the taxable value at current market value.
As a homeowner myself I'm being a bit hypocritical here because we bought at a low point in the market and now pay a fairly low rate of tax relative to the change in the property value, but on the other hand that outcome was the result of years of waiting for an opportunity to time the market.
[1] http://www.sacbee.com/news/politics-government/capitol-alert...
This means you have people living in Sydney with multi-million dollar properties - which are just modest houses in now-desirable suburbs - who haven't paid any property tax since the 60's, and who can't move anywhere because they'd be up for so much stamp duty in one hit (easily 50-100k).
Furthermore, the state government has unpredictable revenue streams based on the ups and downs of the property market (you can have high prices but low volume) and the labor market is more calcified because people are unlikely to sell and move to access a new job.
The result is tightly held real estate, variable state government revenue and ever-higher prices. Adding fuel to the mess is a universal belief by local governments that housing development is evil and must be curtailed, so they concentrate on high density and infill development, which drives the prices of stand alone property ever higher.
Unsurprisingly, Australia just about outpaces Canada for the most severely unaffordable housing market.
And yet if you ask the average person in the street, they will blame 'interest rates' or 'Chinese buyers', and not once look at the ridiculous blockage on supply.
We have a low interest rate fuelled asset bubble and 1%'ers are complaining that they can't afford detached housing in Vancouver, never realizing that if everyone in Vancouver live in detached housing we'd need 150% of the available land in Vancouver (like no roads, offices, parks, pools, etc just detached housing)
It's stupid to expect to be able to live in detached housing in a world class city. The other thing is that Vancouver isn't really a 'city' in the way that many others are, the 'burbs are separate cities so we get this 'most unaffordable' label when its really much better than many other cities.
This is new - has the owner said that multiple families will live in that house?
It's stupid to expect to be able to live in detached housing in a world class city
Since when did Vancouver become a world class city? I don't mean that to be cruel; I live here myself. But Vancouver has neither the culture nor the power nor the money to be considered world class. The people are poor, the economy has a paucity of opportunities, and now the housing really is only marginally affordable, even if you go out somewhere crazy far like White Rock.
What are you comparing to? Here in the US, it's exactly the same. Every single "big city" is really a metro area with a core city that bears the famous name, and a slew of separate cities bordering it. "Phoenix" for instance is a collection of a bunch of cities: Phoenix, Mesa, Tempe, Chandler, Glendale, Scottsdale, Gilbert, Paradise Valley, Sun City, Peoria, etc. "Los Angeles" has more cities than I can count. "New York City" is a little more centralized (since the city annexed a bunch of the bordering cities back in the late 1800s, turning them into "boroughs"), but still has White Plains, Tarrytown, and cities in bordering states like Stamford, Jersey City, Newark, Bayonne, etc.
Maybe European cities are singular like that, but not here in the US.
I think that this is the other dimension to the Vancouver housing problem that no one is talking about yet. Vancouver is separated from the rest of the province by the Fraser river to the south-east, and regional development policy for about 30 years has been fashioned to make it difficult for anyone to live south of the Fraser.
If we put more bridges across the Fraser and built more highways, I think most of this problem would go away on its own.
What I'm advocating isn't simply a one-off highway and bridge expansion; rather I want the regional development plan scrapped and I want a new one that no longer treats Richmond/Delta/Surrey as a separate development region. Rather than fighting and antagonizing families who want to live south of the Fraser, we should try to integrate Delta and Surrey more completely with Vancouver and Burquitlam. Highways to bring people to their jobs in Vancouver, yes; but also a focus on encouraging businesses, perhaps through preferential taxes, to locate in Delta and Surrey. We should be planning, zoning, and developing to minimize the presence of the Fraser. That would include more bridges, but it would also include more mass transit.
And if we need to pay for this somehow, I can't think of a better way than a non-linear property tax on everyone west of Cambie. ;-)
Property taxes have some major fundamental problems, not least of which that using them to pay for local services tends to make such services better in more affluent areas and worse in less affluent areas. They produce potentially unbounded and unexpected expenses long after paying off the house itself (which impacts retirees and others trying to predict future expenses). And on top of that, as mentioned in the comments here, attempts to control the growth of property taxes can create major supply issues in the housing market.
So why not get rid of property taxes altogether? Most states/countries already have either income tax, sales tax, or both. Why not settle on one tax, either income or sales, and use that for all government expenses?
You need to remove incentives to invest in property altogether. It's one of the worst and most unproductive markets, and not even a market in practice because everyone needs a home. My personal pope-emperor utopia would forbid companies from owning residential buildings, and tax individuals 10% of house value yearly on any house (with the first two exempted). Redevelopment should be allowed only when the area is in clear state of abandon, with strict rules on the amount of commercial space that can replace residential space.
The property market needs to die -- and I say that as a homeowner.
In the context of property used as a residence, I'm suggesting that property taxes produce undesirable effects, and that other forms of taxation might potentially work better.
"In the context of property used as a residence", most European countries do not tax first homes, end of story. It doesn't stop prices from growing.
I'm not talking about sales taxes on the sale price of a home; the US doesn't tax those either. I'm talking about property taxes, as in the taxes typically assessed by a local government to property owners as a percentage of the appraised value of their property. I'm saying that such property taxes produce various undesirable effects (as mentioned several comments up).
That's orthogonal to questions of how to deal with people owning, buying, or selling multiple homes. It may or may not make sense to apply different rules in those cases, such as not providing an exemption for sales taxes on such properties. (Though you'd have to be careful there to not cause problems with rental prices.)
Actually it is taxed as a capital gain ( subject to some deductions )
Utilities should be paid per-use, just as it is now. People with bigger houses are naturally going to pay more because a bigger house usually needs more power/fuel for HVAC, unless their house is more efficient. Also, we need to incentivize making homes more energy-efficient, and regressive policies like yours discourage efficiency. Smaller isn't always better; crappy old small houses and apartments can easily use far more energy than new McMansions.
And that leads me to one big problem in the rental market is that landlords never spend a dime on improving or renovating homes for better energy-efficiency, because the tenant has to pay all the utilities.
Maintenance is not going to be any higher for lower density; it's not like you see electric utility workers in the suburbs constantly, repairing stuff. And access is more difficult in higher-density housing too: in a suburb, you just drive the truck up to the transformer, but in a large building, it isn't that easy.
As for rural areas, there's a huge difference between urban and rural areas (where houses are miles apart), and urban and suburban areas (where houses are 20 feet apart).
If that were the case they could charge 'fixed utilities' at a reasonable price and then when they upgrade for energy efficiency they reap those gains.
Why not just have some kind of regulation requiring rental dwellings to meet certain energy efficiency standards? And combine this with some programs to help landlords upgrade, perhaps with low-interest loans or something.
Additionally, much speculation is in post improved land...e.g. apartments; they have to do something with their property also, not just build it up. Otherwise its a drain on the economy and distorts the real estate market.
As for discouraging speculation, property and land tax schemes can both be used. However, in an environment in which other landowners are improving, the tax burden of a speculator just sitting on their property goes up under a land value tax.
However, it's best to tax broadly and close to the generation of income.
I think land taxes couples with sales and income taxes is an efficient combination. Land taxes penalise land banking, and encourage the most efficient use of land.
Sales taxes penalise consumption, and encourage savings or investment.
Of all, income taxes penalise earnings, but earnings are unavoidable for most people. But they do incentivise investment income where there is a differential, which could be mildly beneficial.
The key to all these is uniform applicability and flat rates. The massive drag that tax minimisation has on an economy is underestimated routinely.
From the property front - land taxes should be paid annually, there should be more releases of land with fewer restrictions, and there should be no/minimal transaction taxes to go in/out of a property.
I don't understand. When you're making millions on the sale of the property, how is 100k in stamp duty a problem? It's on the same order as your agent's commission!
The problem is that you're going to have to pay 30% company tax on profits, and it's hard to get a mortgage. However this can always be structured so there aren't any profits (e.g. by improving the house, saving up for another house, ...)
The point of this construction is to never sell the house, so that might be avoided here as well.
It's a tax on moving.
If you want to leave your 4 bedroom, 1 million dollar property and buy a 2 bedroom, 1 million dollar apartment, you have to forego 100k just to do this? Obviously most people choose to not move. They'd rather the money goes tax free to their kids, or to just borrow against the house and spend the money.
It's a strange attitude to suggest that paying $100k to the government is 'not a problem' just because your house is worth more. If you were in the same position I think your attitude would change somewhat.
So if you sell your house to help fund your retirement then it is duely punished by missing out on money from the government.
Much better to refinance the house and live of that. Hence more tightly held homes.
It's not like income tax where your tax bill only goes up when you get more money to pay it with.
If the value of your house goes up because you remodel the kitchen, then it seems fair that you should be able to pocket that value. You did the work, so your taxes should not increase.
If the value of your house goes up because the government opens a new light rail station nearby, then you did nothing to earn this, so it seems fair that society should be able to get higher taxes from you.
In a speculative bubble, you did nothing to earn the extra value, but---arguably!---neither did the government, so it is less clear cut.
I assert it's a problem with a non-trivial solution.
If you have a house built in 1902 in the middle of a big city, you're paying minimal taxes and find yourself surrounded by high-rises, it's very inefficient land use. Your lot could provide housing for hundreds if not thousands of people if another high-rise was built there.
Thus, you should either pay for your privilege (in taxes) or sell the lot (for a lot of money, presumably) to let other people use the space more efficiently.
However, I must say that a property tax itself is a wicked one and should be replaced by land value tax. Land is more valuable in the centre than in the outskirts of the city, so when properly taxed it creates the tendency to increase density of the highly taxed land and allows for more liberal land use where nobody else wants to build.
In contrast, land value goes up in the average if a lot of people keep building desirable buildings in what turns out to be a desirable district in the city. That promotes what people like. Consequently, inefficient land uses move further away from the desirable areas.
Implementing neither property tax nor land-value tax is not straight-forward in general and there are corner-cases that need to be sorted, but in general land use is what ultimately provides its value. Often property tax codes already incorporate parts of land-value taxing, but the intrinsic value of property to be taxed is debatable: what is the value (to the community) of a small, low-taxed detached house in the downtown versus a huge, high-taxed mansion outside of the city? The opportunity cost of taxing property might be huge.
Since you want them to move out so bad, why don't you have the government pay them to move out? I never see these local governments offer to pony up $10k or so for the moving expenses for people priced out of their houses to move out. These people bought a house in a town thinking it'd be a good place to settle down, not that they'd be forced out of their house in a decade or two. It's really no better than forced relocation, which is a form of genocide.
Being priced out of a market is not the same thing as genocide.
Population transfer is a different thing from gentrification is a different thing from eminent domain is a different thing from genocide.
You only get more people living and working in the area if you build more houses. If you do that, then of course you're going to have more property tax, even if the existing house values don't change at all. New houses = new property taxes. That's how you pay for the extra policing, not by soaking the existing residents.
The police can get their money from the property tax for any new residents who have built new houses.
If there's no new houses, then there's no net increase in population, and there's no need for more police, or more police buildings.
The City of New York is just building a new police station in an area that's been fully built up for roughly 150 years. http://www.dezeen.com/2016/02/01/big-bjarke-ingles-new-york-... I expect the Vancouver police department also ends up paying its officers extra to cover the boomtown rents.
(Not just police, of course. All public services.)
When my car wears out and I need a new car, I don't go to my boss and say "hey, I need money for a big down-payment on a new car, so I need you to give me a big raise." And then, 5 years later, come back to my boss and say "I need yet another new car, so I need yet another big raise to pay for it."
Instead, I save money over time so that when I need that new car, I have the money already saved up for it. In fact, I've saved the money because, over time, my old car has gotten cheaper to own (lower insurance, lower registration fees, loan paid off), and I've budgeted for transportation expenses over all that time so that the new car cost isn't a big surprise.
So please explain to me why the existing taxes for police services aren't enough for them to save up and budget and buy new buildings as necessary.
As for boomtown rents, that's not a problem either. The boomtown means that property values are skyrocketing, which means that property tax revenues are also skyrocketing, so they're already making more money without even having to raise taxes. So why do they need even more?
Perhaps the town of Starnberg is an instructive example. It's a small town in Germany which hasn't grown much in terms of population, but its property market has boomed, BOOMED, enough that the city's employees had problems. Rents increase, their salaries don't.
Last time I was there the local newspaper reported that for several years, the only police officer who worked there voluntarily was the chief. The force hadn't had a single application to any of its job postings for years, and all the old police officers had gotten better-paying work or moved to lower-rent towns. German police can be ordered to serve for a while, and the Starnberg city police force was composed of newly educated police officers who had been ordered there by the state, lived on 10m² while they had to, and who left Starnberg as soon as they were legally able to.
I understand the city council was trying to find some way to solve this. To pay the employees a sizable extra to compensate for the high cost of living. (Haven't followed the news there.) Anyway what employees said wasn't "I need another new car, so I need a new raise", they said instead "I need another new car, so I got a better-paying job, goodbye" or "I need another new car, so I'm moving, goodbye".
1% is less than the inflation (even more so is the real estate is shooting up), this means that city spending will increase by more than 1% and that other younger citizens will have to pick up the slack.
I can't imagine a single unimproved residence being anywhere in that neighborhood (even going all the way to 1978); examples are welcome.
Median Home Values: Unadjusted
2000 1990 1980 1970 1960 1950 1940
California $211,500 $195,500 $84,500 $23,100 $15,100 $9,564 $3,527
From: https://www.census.gov/hhes/www/housing/census/historic/valu...
Beyond that, those numbers are fudged and do not reflect the changing value of the dollar. $3,537 in 1940 is $59,711 in 2015 dollars[0] (or $43,382 in 2000 dollars[0]), so your "two orders of magnitude" claim falls to a mere factor of less than 5 times, or < 5% of the "two orders of magnitude" claim.
And again, that isn't even a level comparison given that housing construction costs are far higher (well beyond the rate of inflation) due to more features, stricter building codes, modern appliances, permits, ...
[0] http://data.bls.gov/cgi-bin/cpicalc.pl?cost1=3527&year1=1940...
In nominal dollars.
<Property tax in 2013 was about $1k in both cases>
I really doubt that. I just checked a friend's house who has lived in PA since 1952, and they are paying $3200.
Anybody can look up what actual property taxes are paid here:
So the gain is 23x, which is still insane.
The problem isn't the elderly, the problem is that Prop 13 includes commercial properties
If a single-family home in Vancouver cost $150,000 in 1980 and now it's $1.8 million it looks like a difference of $1,650,000.
But that $150,000 is equivalent to $411,000 in 2015 dollars so the real difference is $1,389,000 still a lot but it's nothing to scoff at.
1 The local government sets their budget.
2 Then a valuing company sets property values once every 3 years based on permits and local sales.
3 Then the mill rate (property tax percentage) is set at a rate to clear the budget.
Tax rates are stable as property prices increase. The only thing that wouldn't be under your democratic control would be if your neighborhood suddenly became very desirable, changing your house price substantially while leaving other areas unchanged.
If you cannot afford the tax bill, there are programs for low-income or retired persons to get debt forgiveness.
Not really, in Maryland property taxes are reduced for house holds making under 60k and are zero for people who make under 10k. There are limits on the value of the home so you can't buy a mansion and then live in it retired and tax free but it protects poor people and old people.
Actually, it's an easy problem to solve technically; the hard part is selling the solution politically.
All you have to do is, instead of capping the growth of the tax rate, you cap the growth of the required payment against the tax. If the tax is greater than the required payment in a given year, the locality gets a lien on the property for the difference; but, critically, that lien does not become due until the property is sold.
This system would let localities collect, in the steady state, as much property tax as they would have before; it's just that they wouldn't actually receive part of the tax on a given property until it was sold, so the money coming in would be a little lumpy. But that doesn't seem like a serious problem.
Anyway, the point is, if localities could still collect the amount of property tax on residential properties that they need, they would be more inclined to encourage residential construction.
It's been done in places, and it should have been done in California. Prop. 13 is destroying the state.
But like Vancouver we have serious issues with the housing market. We have a green area around Oslo were you can't build on (that is where everybody goes skiing and hiking).
And we have the extra problem that due to being so far north we can't build high rises otherwise we wouldn't get any sun in the city in winter time.
But they have started turning a lot of old villa areas in to 4-5 story buildings. So densification is definitely a strategy being followed in Oslo.
No, it sets your base tax value at purchase to 1% of the purchase/FMV price, and its increases from there are annual and limited to 2% of the previous tax.
e.g. assuming a purchase price in 2015 of $1 million:
Year Tax
1: $102,000 max
2: $104,040 max
etc. (initial * (1.02 ^ year#))
<Your tax gets re-calculated only if you sell your house>
Or any other change in majority ownership. It can also be triggered by improvements.
Note that local governments heap many additional taxes in the form of "parcel taxes" that are fixed amounts -- a regressive tax effect (a $20M estate and a $300K condo pay the same amount).
Encourage / incentivize mixed use developments with affordable housing units.
Tax unused empty lots, empty apartments, low volume office buildings, etc..
Build affordable compact mobile homes.
The housing problem is multifaceted.
"Let's just get rid of prop. 13 today." Do you really think the price of realestate, or rentals will go down?
In my county, the county workers are already paid over $100k/yr. for picking up trash on our supposedly filthy trails. Our county workers are paid very well. Where I reside we have cops everywhere. You could remove 75 percent of them, and I don't think anyone would notice, except for the fees they bring in.
Howard Jarvis knew what government did with more money; they spent it on themselves.
O.k.--I'm not in the mood for this, but the housing crisis in the Bay Area is due to a lot of factors. It's a nice place to live. Your boss wants the best. I don't know why they picked the Bay Area. There's other nice places, with temperate climates? He wants only the best for himself, and his spawn. The best house. The best schools. The best car. And by golly, he only deserves the best?
San Francisco, and Marin county are not designed to scale. San Francisco has a better shot at growth than Marin, but I leave that alone. They can go up in S.F.? But I don't think that city will ever see real subways, and not because of money.
Some Bay Area residents are NIMBY'S. Some have good reason--look at 101 at 3:30 p.m. The sewers are old, and small. The streets are narrow. It's surrounded by oceans, federal parks, etc. It's not a vast area.
Local governments almost never approve variances. Sure they take the money, but never approve. It's very difficult to build in the Bay Area. It's almost like they go out of their way to curtail growth. I would love to build a small cabin. Twenty years ago my dreams were shattered when I tried. The kind lady at the planning department, said I'll take your money for the variance, but honestly-- they never approve.
When I was a kid Howard Jarvis wrote a book, called I'm Mad as Hell. My father was a new journeyman electrician, and when my father would look at that property tax bill yearly. My father was beyond disgusted looking at those rising numbers. Every year they took money, and spent it on Themselfs. My father was a conservative Rebublican, but was all for prop. 13, along with millions of Californians. Even though I was a kid, I could feel the anger among adults. The politicians had a little game back then; raise the assessed value one year, raise the tax rate the next. There was always the same loser in this games, and it was the guy who paid the taxes.
If you honestly think the housing crisis is due to prop. 13, read ISBN: 0-8129-0858-9 I'm Mad As Hell.
By the way, I'm disgusted with the housing situation along with everyone else. I don't blame prop. 13 though. A few weeks ago I heard a lady on the radio say, "I lowered my tenants rent $500 a month." Announcer, "Why?" Moral lady, "I was having a hard time looking at myself in the mirror."
Land use policy is the cause, preventing supply to meet demand.
California’s High Housing Costs: Causes and Consequences
http://www.lao.ca.gov/reports/2015/finance/housing-costs/hou...
"Building Less Housing Than People Demand Drives High Housing Costs. California is a desirable place to live. Yet not enough housing exists in the state’s major coastal communities to accommodate all of the households that want to live there. In these areas, community resistance to housing, environmental policies, lack of fiscal incentives for local governments to approve housing, and limited land constrains new housing construction. A shortage of housing along California’s coast means households wishing to live there compete for limited housing. This competition bids up home prices and rents. Some people who find California’s coast unaffordable turn instead to California’s inland communities, causing prices there to rise as well. In addition to a shortage of housing, high land and construction costs also play some role in high housing prices."
New York is a great example of a place with runaway train property taxes and perennial housing shortages in the NYC Metro area.
Property tax escalation creates vicious cycles, vaporizing buying power and creating disincentives for property maintenance, especially in older houses and poor neighborhoods.
In those areas, government aid programs create a housing price floor, so property owners maintain the minimum requirements for habitability, run the property down to zero value, and walk away.
Here are a couple of solutions:
1. Build really tall. Hasn't worked out all that great in Hong Kong, though.
2. Rent control. This is often unfair and inflates price of non-rent controlled apartments.
3. Tax the living crap out of property speculation. Not sure if this has been tried anywhere, and I'm sure it would be unpopular among many middle class home owners as well. I'm still rooting for Georgism.
4. Accept that it's a lost cause and move on to the next underdog city that will stay un-gentrified for the next 10 years.
Pricing has stabilized, and, even is dropping a little bit.
The BC Provincial Government is working very hard to ignore it as a problem, where they won't even commission studies to generate data on how bad the problem is (or isn't). The federal government has also signaled their distancing from the Vancouver housing issue.
Also, the real problem is foreign ownership. Canada has some of the loosest foreign ownership laws in the world, and provincial/federal governments do not punish foreign ownership with taxes or anything of the like. That means if you are making a lot of money in a corrupt country (China/Saudi Arabia), the Vancouver housing market is a great insurance policy.
The result is you have entire neighbourhoods with no available properties, but are virtually empty (Coal Harbour), and new buildings are built small and shoddy (meant for investment, not livability).
My wife and I make over 100k per year combined, and we will absolutely be leaving the city when we start a family. It all stems from the fact that the local government is willfully ignoring what can be compared to a cancer. It'll only get worse.
What evidence is there that foreign ownership is a major problem? I've heard plenty of anecdotes, but no actual data. I do know that Vancouver real estate agents are milking the "yellow peril" for all it's worth. "Buy now before China owns all of Vancouver!".
Suffice to say, Canadians are doing what American's did in the early 2000's. They are going into a crazy amount of debt to buy housing, which is only pushing prices up even higher. Some of the stats make Canada look even worse than the US did at it's peak[1].
[1]http://2oqz471sa19h3vbwa53m33yj.wpengine.netdna-cdn.com/wp-c...
http://www.theglobeandmail.com/news/investigations/the-real-...
Ian Young, who writes the Hongkouver blog for the South China Morning Post, said this in a recent interview with Vancouver Magazine:
> We’ve got peer-reviewed academic data from David Ley at UBC, who found what he called ‘an unusually decisive link’ between immigration and property prices in Vancouver, and this is going back over 25 years. We had Markus Moos and Andrejs Skaburskis who did another peer-reviewed piece of academic research that found that prices in Vancouver had become decoupled from local incomes by virtue of the fact that the home buying behavior of many recent immigrants was not tied to their local income. That cuts directly to the issue of foreign money.[1]
A quick google for those authors will turn up their studies.
If anything, those studies show that ethinic-Chinese people are more predisposed to buying a house than renting, even when renting is much cheaper.
But I agree - we should have something a bit more conclusive than 'Chinese names'. But the whole point is that the current provincial government is actively hostile to requiring real estate agents to collect this information. So last names are all we have.
His data is interesting and adds to the conversation, but is not peer reviewed or an academic study[1].
The studies I refer to above are more rigorous in their approach and thus their results are, imho, more reliable.
http://www.vancourier.com/news/controversial-foreign-ownersh...
It's pretty easy to find them. Google 'Andy Yan'; he's an economist at UBC who did the most recent study.
Suffice to say, Canadians are doing what American's did in the early 2000's. They are going into a crazy amount of debt to buy housing, which is only pushing prices up even higher.
Vancouverites are going into unsustainable debt, but at this point mostly for condos, which remain expensive but affordable. The detached house market is long past being affected by CHMC policy and borrowing rules; not even doctors and lawyers can afford the $5-6 million dollar homes that are such a big part of the market here, not even with leverage.
This is part of what I try to tell people when they say that the Vancouver housing market is a 'bubble' - it isn't a bubble because it isn't being driven by leverage; it's being driven by regulatory differences in Canada and China; China has a punishing inheritance tax, and Canada has the most lax rules in the OECD for importing money and buying real estate. There simply is no 'bubble' here to burst. That's not to say that the situation isn't extremely unstable, but without leverage this simply isn't a 'bubble'.
Why Chinese buy abroad: to park money outside of China, to participate in real estate markets leased screwed up than their own (say what you want about Vancouver, it isn't anywhere near as bad as Beijing Shanghai Shenzhen), and to have an exit plan when they fall out of favor or things go to hell in China.
Sorry; proposed inheritance tax.
http://www.ibtimes.com/chinas-proposed-inheritance-tax-meets...
My point stands; Canadian interest rates could double and Vancouver house prices wouldn't budge; some Canadians would have their homes foreclosed on, but there's so much money in the market from China that homes here would still be unaffordable to people working in Canada and paying Canadian taxes.
This just isn't a 'bubble'.
China has no inheritance tax, it also lacks a property tax or even a capital gains tax. Libertarians would love it here if it weren't for the police state...
Nice! This sounds like a pretty good way to game the system; earn all your money in a tax-less free-wheeling libertarian wonderland, cash out, then bring your millions to a place with no wealth tax! The new place will have lots of social services and lots of burdensome income taxes for the locals to pay for them, but you made your money and you don't have income to tax! Win!
I should figure out how to get in on this.
Anyways we've seen is before with the Japanese in the 80s, and it eventually all crashed down, leaving the Vancouver/Seattle/California real estate markets in a rut for more than a decade! I'm guessing when the Chinese economy comes back down to earth, the exact same thing is going to happen again.
I too am skeptical of the Japan comparison. China is both a very densely populated but also an extremely populous country and I think its just natural that a lot of Chinese will want to leave for less-densely populated places. Just the number of people involved makes this a problem unlike any other we've seen in history; how many tens of millions of Chinese millionaires now have the option of picking up and leaving their homeland? The scale of the migration is larger but the size of west coast cities isn't; certainly not by a factor of 10.
Anyways, we've all heard "its different this time" before, and it never is.
I know of several developers, whose advice and preference is to move out of the city (closer to skiing/biking/etc) and work remotely for a US company.
There is plenty of evidence of the foreign property issue, and the willful ignorance of the government. Besides everything else posted, here's an academic case study:
http://news.nationalpost.com/news/canada/in-a-six-month-peri...
http://www.slideshare.net/ayan604/ownership-patterns-of-sing...
What do you mean when you say it hasn't worked out great in Hong Kong? Is it because prices are still high in a lot of neighborhoods there? I'd say the build-really-tall strategy has worked out quite well in HK. There is a range of affordability in close proximity with good transit, and lots of parks and open space. It's a remarkably livable city.
The fundamental problem is that real estate in major cities has become a scarce luxury good covered by the wealthy. Restrictions on building - rent control and aggressive property taxes basically fall into this category - only make things worse.
The only way to make Vancouver, SF, and anywhere else affordable is to radically increase supply relative to demand. In practice things aren't that simple.
The best bet for someone looking to live and raise a family is probably your fourth option. There are a lot of really nice cities out there.
I'm far from an expert on this though, and maybe I'm off base here. I've just spent time there and looked at real estate and been struck by how not impossible it was to find reasonable places at reasonable prices compared to the Bay Area.
Of coz if you are working in Hong Kong as a wealthy individual you would have no problem enjoying everything HK has to offer. This is the same as any other place in the world.
https://twitter.com/FIVRE604/status/697822416894951424
You have to also include the City and State difference. Vancouver has a problem with Median Salary to Housing price at 10, and Sydney is at 12. Hong Kong is 19. Which means if HK property prices dropped by 50% it will still be around the same level as Vancouver.......
The german real estate market was undervalued for a very long time. In the last 10 years there has been a very rapid (100%+) rent increase in the cities and a massive property rush from foreign investors in the in major cities (especially Berlin). Another factor to consider: seeing that 1.5million+ "refugees" came to Germany in 2015 alone, these increases will become even sharper over the next few years.
There's the rub. Virtually all rent control schemes in North America only apply to a subset of properties (usually the shitty ones), which isn't fair and often doesn't work. Meanwhile, Germany has a long history of successful rent control, perhaps not coincidentally because it applies universally.
It is always and every time a terrible idea. It should never be implemented anywhere, at any time, for any reason.
Price fixing destroys markets and creates a tiny subset of winners at the expense of everyone else.
It's a tremendous outlier - both in population (8000 full time residents) and in pricing (even more expensive free market housing than any of the big markets that are typically discussed).
The solution was to build city-subsidized "resident housing" that actual residents (as opposed to seasonal) enter a lottery to win, which gives them the ability to purchase the property (again, subsidized) and become property owners inside Aspen. Although the property itself can appreciate with the market, the owner can only realize 2-4% appreciation per year - the rest goes back to the city.
It works. There is a legitimate, affordable path to actual home ownership for regular folks in Aspen, and it takes those people out of the "affordable" rental pool which softens the pricing pressure for people who aren't staying forever or who haven't won a lottery share yet.
And don't say, we need parks! I'm fairly certain that large amounts of that parkland is unused because you need to hike in pretty deep to enjoy it. And highrises can be built on mountains.
So we should monitor how far people hike into these parks? And if the number of people in a remote part of a city park falls below X number of people a day for Y days we should just bulldoze that part of the park for buildings?
I think a few acres of park land can be developed to release pressure on the housing market so people are not forced by circumstance to live in such situations. And by developing on some park land, the deep park land will start to get some utilization.
Go look at singapore for example, they use a significantly larger amount of their land as actual city space.
Politicians can put as many fancy well-intended laws in place as they want. All these laws will have only have minimal effects on the underlying supply and demand market forces. In fact, chances are that those laws will even increase the overall average rent due to the added bureaucratic overhead und regulations that are indirectly passed on to the tenants.
When I was younger (1990s), I don't remember it mattering so much where you were located. I've spoken to older people and they concur: they've all said that when they were young being in, say, Indianapolis or Toledo was not a big deal.
Today, at least in the USA, there's a strong sense that you're nobody unless you are in one of about eight big coastal cities. Nothing happens anywhere else.
I'm talking about perception here. You can argue that this isn't really true, and that you can do anything most anywhere, but the cultural perception is that you're nobody and can't do anything unless you are in NYC, SF, LA, etc.
I'm a startup founder and have been told by several people on several occasions that we are doomed because we are not in the Bay Area. I'm in SoCal but apparently if we're not in SF or its Southern suburbs it's impossible to succeed as a tech company. Obviously I don't believe this, but the meme is strong. If enough people take this stuff seriously, it's going to contribute to a hell of a property bubble in SF/SV.
I still don't understand why this is the case, especially since the Internet was supposed to have the opposite effect. By making information globally available and communication easy, the Internet was supposed to flatten the world and make place less relevant. Instead I've noticed a strong and obvious trend in the opposite direction since circa 2000.
I can only comment on the USA, but what I see elsewhere seems to support this being a global thing. London has gone totally insane for example. I wonder if the Internet is actually having a paradoxical centralizing effect here, allowing larger cities to broadcast their cultural "signal" and then have that signal amplified enough by network effects to make them appear exponentially more and more influential. This in turn drives a feedback loop in which talent and ambition is drawn increasingly to these cities, etc., and the rest of the country is hollowed out.
It's actually part of an even larger trend. Since 2000 everything seems to have gone increasingly power law: wealth distribution, geographic relevance, education, etc.
I'm not saying you're wrong -- far from it -- but the brand has been there for longer than the phenomenon we're discussing here. Perhaps the tech has just made it even more pronounced.
Atlanta has become a really excellent city for graphic artists and design firms because companies such as Cartoon Network pull artists in from the global market, and then these artists stick around and end up engaging with the local startup community. In other words Atlanta is becoming a designer hub (and the city's close-enough proximity to Disney helps boost this effect)
In addition it's also a nexus for medical startups probably due to the fact that the CDC is here.
The other funny phenomenon I've noted is people assuming we are in SV and asking whether we are "down in the valley" or "up in the city." I say "we're waaaaaay down in the valley... like eight hours South." I bet companies in Atlanta will give an address in one of Atlanta's burbs and get asked "where's that? is that in the East bay?"
Maybe the whole thing is just real estate fund or bank propaganda.
However, now we're seeing two things happen:
* Several cities technically in 'flyover country' (eg. Boulder CO, Austin TX, etc.) have already built brands/ecosystems as startup hubs, and more cities are trying to copy their example rather than 'become the next SV'.
* Some fully geographically distributed companies (eg. Automattic, Buffer) are gaining visibility as success stories, and although they are still the exception, I expect more new startups to try and copy them, if only because Bay Area COL is now so ridiculously high.
Areas of Tokyo like Setagaya have population densities in excess of 14000 residents per square kilometer. There are few tall buildings; it is largely single-family homes.
Vancouver proper only has a density around 5000 residents per square kilometer. There's plenty of land to infill with housing without building tall.
What might happen to Vancouver is probably similar to other major cities with housing crunches but an otherwise desirable economic climate: lower wage workers will be displaced further from the city and forced to commute, housing prices will remain astronomical and suck much of the gains from the area.
I recall reading an article about a local coffee shop. A number of new buildings were built around it, all residential condo's. The condo's in the buildings were completely sold out, hundreds of units, yet it was a ghost town around there. The coffee shop, and I believe a local pub as well, ended up going out of business because despite all the units being purchased, nobody actually lived in them.
Similar experience, my office is in the heart of downtown, right on the water. A beautiful building went up beside us, all condo's for sale, starting at $1.5 million. They got bought up instantly. However, once the building opened, I looked out my window and into a building where 90% of the units remained completely empty (no curtains) for well over a year until I switched desks. Foreign investors buy up all this property and it just sits there...empty. Meanwhile everyone that lives and works here is being priced out.
What evidence is there that foreign ownership is a major problem? I've heard plenty of anecdotes, but no actual data. I do know that Vancouver real estate agents are milking the "yellow peril" for all it's worth. "Buy now before China owns all of Vancouver!". Don't forget there is a ton of speculation going on by Canadian citizens as well.
Suffice to say, Canadians are doing what American's did in the early 2000's. They are going into a crazy amount of debt to buy housing, which is only pushing prices up even higher. Some of the stats make Canada look even worse than the US did at it's peak[1].
[1]http://2oqz471sa19h3vbwa53m33yj.wpengine.netdna-cdn.com/wp-c...
There are parts of Vancouver that are just dead. Rush hour now sees more carpenters and real estate agents commuting into these residential areas each morning than commute out. Places like the North Shore are essentially industrial zones manufacturing real estate prices. The people who live there (me) talk of empty neighborhoods populated only by retirees, every other house either under construction or sitting empty.
http://www.nationalpost.com/m/wp/blog.html?b=news.nationalpo...
This 'academic case study' you linked to is cited over and over however, no one really looks at the actual data in it, namely where the homes are. It's literally a tiny pocket, which has the most expensive homes in the whole city, so yes, it's primarily Asian buyers. Not that surprising.
Don't get me wrong - there is a real problem here but that study is repurposed over and over to show the extent of the problem and it's very misleading.
Chinese name? Foreigner!!! Despite Vancouver being almost 50% Asian.
Canada does not collect data on foreign ownership, and the citizenship of buyers in Yan’s study is not clear. But Yan established that 66 per cent of all buyers had “non-anglicized” Mainland China names.
Our full name analysis methodology follows accepted practices in the fields of epidemiology, demography, and political science. This study wanted to see if any distinct patterns occurring when non-Anglicized Chinese names are isolated from the rest of the data set. It is a primary assumption of this study that a non-Anglicized Chinese names may be an indication that an owner may be an recent immigrant to Canada and that an Anglicized Chinese name is an indication of a long time immigrant or non-immigrant and/or multigenerational Canadian of sole or mixed ethnic Chinese ancestry. As a course of experimentation, there may be names missed for new immigrants who have Anglicized Chinese names and long time immigrants or multi-generational Canadian with non-Anglicized Chinese name to may be in the wrong catagory, but, with external reviews, this risk is minimal.
Within this data set, the name patterns were exceptionally and surprisingly distinct as they lacked ambiguous names like “Scott Low” which could be a Chinese or Scottish name or “John Li” which could be Chinese, Vietnamese, or Korean name. These names did not exist within this data set. Non-Anglicized Chinese names in the study were either in a three or two name sequences that our literature survey suggested were Chinese with no ambiguous names. Without direct measures of immigration or citizenship status and property ownership that are publicly available in Canada, this is an indirect measure of how globalization, non-localized wealth, and immigration, particularly from China, Hong Kong, and Taiwan or Chinese global diaspora are entering one portion of the real estate market in Vancouver.
It's not perfect, but it's all we've got.
It's anecdotal, but I know a number of US and Canadian citizens who have non-anglicized Chinese names. I would say most people who immigrate to Canada keep their original name. I also know a number of 1st generation Canadian who have Chinese names, but also English nicknames.
http://www.immigration.ca/en/immigration-wiki2/151-updates/7...
Not saying they always dig into the data to see if you're lying, but they could...
So not only can you buy property in Vancouver, but you can send your family over without worrying about any immigration troubles and always know you will be able to come live here if you desire.
2. Canada allows unlimited cash to be brought into the country tax-free as a gift to a relative.
3. Any gains from property speculation will be tax-free if a spouse or child claims the property is their residence. See (1) about ease of getting immigration status for your family.
That is incorrect. It can be revoked if the PR does not remain in Canada for at least 2 years of a 5 year period after it was issued. After the 5 year mark, most PRs have already transitioned to citizenship. http://www.cic.gc.ca/english/helpcentre/answer.asp?qnum=727&...
This obviously isn't the only contributing factor but I know lots of people that have gone through this migration pattern.
When my parents bought their house there it was $275,000 it was almost 75% higher than our house in Toronto. And they sold it for $1,300,000 a few years ago. Crazy, but it's only annualized 6% over 25 years, less than the stock market (but higher than normal real estate I'm assuming). However it's prime Vancouver real estate with fantastic schools, a case could be made that it's worth it if you compare to San Francisco.
The only difference is that no one knows where the money is coming from for the last 30 years. There is no industry in Vancouver, except tourism and the average salary is ~60k.
Having average home price of $1.8m while the median salary is at $60k. Something really needs to be done to help out Vancouverites.
As a city, Vancouver has the ability to vote for significant property tax increases. Which would encourage investors and speculators to rent out more of their (currently empty) property in order to offset the yearly cost of ownership. Right now, it probably is more expensive to sell property that currently has renters living in it, because evicting people is a messy, expensive and difficult process. But higher property taxes make it more expensive to own: a tax of 3% per year completely eats up a 3% yearly increase in property value. Unless you offset the tax through other income.
The other thing I keep seeing is "in Quebec it's much more affordable..."
Yes, and your salary would be much lower and your taxes higher. Apple and oranges?
I make about 100k. I've had job offers for Quebec that are 100k. Seriously - there's absolutely no payscale advantage or allowance for living in Vancouver. And provincial taxes in Quebec aren't much different at that tax bracket either.
Mansions do throw off the average, no doubt, but there's no denying that the typical house price for a typical Vancouverite is now north of a million dollars:
http://www.vancitybuzz.com/2016/01/vancouver-homes-valued-1-...
1. You can drive across a bridge to the east bay and find housing that is half price in semi decent neighborhoods. You can drive out for 2 hours and find housing that is the standard american price. In vancouver, driving for an hour just gives you a 100-200k discount on housing that is already over $1 million, there are no real affordable places to escape to unlike the USA.
2. Nobody in vancouver makes an income over six figures unless you're in the standard professions that make that much, such as doctors, high level managers and successful business owners. Only a very small amount of people are in those professions, and those jobs are not concentrated in any specific area. You could go be a doctor in quebec, alberta or some other small town and still make a similar income but have a far lower housing cost. There is nothing unique or high powered economically about Vancouver, it's not the center of anything. Vancouver's economic climate is NOT desirable.
3. This affordability issue has been a problem for almost a decade, and the provincial & federal governments show no real signs of having any desire to fix it. The only thing that makes it pseudo-affordable is the fact that rent is usually half price to a current mortgage. Housing has increased in vancouver 1:1 with the GDP of the city last year, which is freaking insane. People who have owned houses have gained more than their incomes for years! For comparison, the crazy SF Bay Area is something around 1:6 with (house value increases):GDP.
4. If you're stuck in canada, then there are better places to go to as far as money:price ratios go.
I could go on and on about this, but you get the general idea. Vancouver is pretty much dead to me economically and it saddens me that it will never be a good idea to move back at this rate.
That is an important point, and why some of my friends moved there despite knowing they won't be able to buy their own place. This also seems quite unique to Vancouver, in most other places, like SF, high housing prices implies high rental prices.
Intermediate Software Developers these days made that much for a select few companies (thankfully large ones that hire more and more people).
The issue we should be tackling is the low wages seen in the area. The same developer who could make $100k USD in the valley makes $60k CAD in Vancouver.
No fresh grad ($60k) should live in "trendy" Yaletown district with 2 BR + 2 Bath.
Previously to that in Vancouver I lived in the heart of Yaletown in a 550sqft studio costing about $1300/month, and started living there on a salary of about $62k.
I've never had financial struggles living in Vancouver with salaries ranging from $42-85k, and have generally had enough disposable income to afford to travel quite a bit, ski at Whistler every weekend, and eat out and go out regularly.
That said, it's totally a renter's market. It's unaffordable for me to buy anything that I'd want to live in for the longer term, unless I go to Surrey or somewhere else in greater Vancouver, which would completely take away or hinder a lot of the benefits I see to living in Vancouver.
I estimated I was paying $100 more to live in downtown, but that was almost equivalent to the savings in transit fares.
The tech salaries are absurdly low. The tech CEOs who pay poor wages and are complaining about their inability to retain talent are the same ones blaming real estate.
Select BC and enter in the typical income for an experienced developer in Vancouver which is 75k. Your take home salary is $59,000 plus you aren't offered any options usually just straight pay. This doesn't include all the other deductions such as EI and CPP.
Now convert CAD to USD and you're a professional experienced developer making $42,000 USD per year, in one of the highest cost cities on earth.
I don't know if EI and CPP would add up to $5,000, but certainly it would be much less if you throw Health Insurance into the the calculation.
neat.
Now I just need to find a job paying that amount... oh wait. :/
The taxes are not really higher in BC. I do agree that the cost of living is however a lot higher.
The problem as I understand it is that a ton of Vancouver's housing is occupied by children of mega rich people from Asia (mostly China) who are rich enough to not care what rent costs which drives rent up for everyone else. There's such a huge l mismatch between housing costs and salaries in Vancouver.
But then again 'decent' and 'comfortably' are subjective.
A senior engineer in Seattle can do the same, and save ~100K/year.
Most people would do well to save 20% but even assuming people save 33% then you reckon senior engineers earn over 300k?
If you can 'live well' in the more expensive Vancouver at a 110K CAD salary, you could easily save an extra 100-200K USD by moving to Seattle.
Your figures don't seem to stack up RE Google:
https://www.glassdoor.ca/Salary/Google-Seattle-Salaries-EI_I...
Housing is getting expensive, but you can still buy a small 3br for about $400K in my neighborhood just south of Bellevue, so saving $100K does sound plausible.
Microsoft pays a bit less, but also employs ~30,000 people in the area.
Microsoft and Amazon are hardly an exception in Seattle - now that Boeing is leaving, they are by far the biggest employers in the region.
Microsoft, Amazon, starting salary was 85-90k to 100k+ 2-3 years ago for 2 years - 5/7 years of experience.
Salesforce Intermediate/borderline Senior SDET (SDET typically make less than SDE) starts from 100k base with a bunch of plus plus that can boost their income to 120k-140k.
OpenDNS lurking well above $100k as well for intermediate developer.
Mogo.ca pays their front-end dev $100k base and this is a small-medium size company.
It's not the norm but thanks to US-based companies, salary is moving up and up.
The brain drain is slow but inevitable.
I'm willing to bet if you were to map the relative rate of increase of income vs. property values over time that you would see that property values are increasing at a much higher rate than income.
I earn what could be considered a good salary, there's less than zero chance in hell that I could afford property in Marin today short of winning the lottery or massive liquidity event.
The real issue is property owners know someone will eventually come along and pay whatever they're asking. If wages were to dramatically increase, they'd never stop and think, "Yeah, I think I'll cap rent at $3000/month because I'm a nice guy." They'll gladly take $4000 if they can and never settle for less once they hit that point. Instead of considering lowering rents, they'll ask why you just don't get paid more.
Can you guys all start up a shared google doc and hash this out to figure out which one of you is right and why the others are all wrong?
I think Vancouver actually pays tech workers pretty well because there is a high demand, a few big companies and lots of smaller innovative ones.
Vancouver doesn't have the typical jobs that pay for $1m houses and yachts though. Opportunities in finance and corporate HQ positions are minuscule compared to big US cities and Toronto.
Currently working remotely for about 115k CAD with a number of other perks.
I moved from Dublin, Ireland to Vancouver. Dublin rents are very high - probably as bad as Vancouver. The cost of living here is slightly lower though.
"suggesting the typical wealthy foreign family buying Vancouver real estate pays little or no income or capital gains tax"
http://www.theglobeandmail.com/report-on-business/economy/ho...
Seattle has a bunch of similar articles about "outsiders" supposedly driving up housing costs. Which is absurd: steel frame construction and elevators are very old technologies that allow humans to build just about as many housing units as can be desired.
However, condos come with their own issues as well. There has been a building boom in Toronto that has it owns issues.. http://www.cbc.ca/news/canada/toronto/fears-that-shoddy-toro....
I think urban planning is more complicated than simply increasing supply.
http://www.spur.org/sites/default/files/wysiwyg/asking.price...
Real estate as an export is .. well, it's a response to circumstances, I suppose, but is it really sustainable? After all, you can't just make more land with the property "within 1km of Central Park".
What happens when the majority of a city is owned by foreign landlords? Do you think that might distort its politics?
Foreign property investment is very bad for the long term prospects of a city.
[1] http://www.theguardian.com/housing-network/2016/feb/12/tory-...
A single bedroom, that when built as the spare room for kids to play in or a visitor, costs £400/month.
Myself and several friends have left London. Perhaps I've been replaced by a 21 year old British graduate, but this seems less likely than 10 years ago.
Most incomers are young people, but not all are graduates — many come from Eastern and Southern Europe and work low-skill jobs. I put "British", but probably meant someone one would expect to live in London for a long time. I got to know a few construction workers from Poland and Romania, and none of them had any intention to stay — they were in London to make money, and several had wives/children 'at home'.
This can make a functioning city, but it's a change from London of 20 years ago, when it would be artists and musicians taking some of these cheap houses and I think fewer people were there to make some money and leave.
A good part of why I left is because it wasn't as interesting as it used to be. I wondered if I was getting old, but then, "of the 430 music venues that traded in London between 2007 and 2015, only 245 are still open" [1]. I certainly noticed that there were fewer gigs I wanted to see, and they'd moved from Friday/Saturday to weekdays.
The other part: I was working for a scientific charity, with charitable pay. I wasn't saving much money, even with living in a shared house, so decided I needed a new job. I wanted to continue writing software for science, so there weren't all that many jobs that interested me in London.
I now live in Copenhagen.
[1] http://www.theguardian.com/cities/2015/sep/09/the-slow-death...
There's always been people coming to London for a few years to make money. Ten years ago maybe it was the Australians coming over here to work in bars and restaurants. I think construction workers would always have been moving around (certainly my dad did); there are probably more of them now than ten years ago but more construction is hardly a bad thing. I certainly don't think there are fewer skilled jobs for graduates than there were: the City has been adding more and more jobs and sprawling down to London Bridge, tech has boomed in Shoreditch, Bloomsbury and elsewhere, there's that huge new medical campus effort around King's Cross. The BBC has sadly been driven away for political reasons, but I don't think there's ever been a better time to be a graduate moving to London.
Where is cheap has changed. Music, indie theatre and groundbreaking art have been pushed further out, to Camden and Highbury and Shoreditch and Hackney and Brixton and Clapham. Soho is halfway to being Knightsbridge. But that's always been the way of these things.
> "of the 430 music venues that traded in London between 2007 and 2015, only 245 are still open"
I have no idea what the real numbers are, but I can tell that's a line designed to mislead, to make you think there has been a decline in the number of music venues without actually giving any evidence for it. How long did those 430 last, on average? What proportion of the music venues that traded between 1999 and 2007 were open in 2007? Indeed, how many music venues were open in 2007? What's the betting it was less than 245?
> The other part: I was working for a scientific charity, with charitable pay. I wasn't saving much money, even with living in a shared house, so decided I needed a new job. I wanted to continue writing software for science, so there weren't all that many jobs that interested me in London.
You pays your money, you takes your choice. Some jobs and some people are surely getting priced out of London. But the city as a whole is doing very well thank you.
We can build units quickly and relatively cheaply (certainly the cost of building has fallen over time, certainly on a like-for-like quality basis. As you say, steel frame buildings with lift access can create housing units quickly and cheaply.
The issue is restrictions on supply caused by government policies and nimbly-ism, plus a general desire to shelter parts of the community from market forces.
It wouldn't matter how many Chinese investors wanted to buy apartments if supply kept up with demand.
To me, there seems to be a pretty obvious public policy response. Institute a very high property tax, which is abated on some kind of curve according to the amount of time the owner or tenants spend living in a property, with no tax being due if the property is legitimately occupied for more than, say, ten months.
It might not solve the problem entirely, but at least you would reduce the effect of a diminution of housing supply that is driven by these kinds of absentee owners, and that must be driving up rents, at least.
https://southfloridaforbeginners.wordpress.com/2012/04/04/th...
In California, the exemption is a measly $7000. Which is essentially nothing, given home prices in the Bay Area. What they need to do is increase that number 10-20X or make it a percentage of the home's value. This would greatly help solve the problem of foreign "investors" buying up all the housing, leaving it vacant, and essentially just treating homes like bars of gold in a safe.
And don't even get me started on Prop 13, which is essentially mechanism to transfer wealth from younger, newer residents to older residents.
Yes, this kills real estate as a long term investment. No, that is a good thing, we should collectively much rather see capital invested in the stock market rather than being thrown into precious metals or property as a store of value.
All that takes is the minimum effort to police the property you own to insure nobody is squatting. What I'm saying is that unconditionally whether or not someone is illegally occupying your property you only have a fixed amount of time to make use of it before it effectively becomes unclaimed land again.
I suspect several other European countries have similar rights.
"Land Registry will decide if your application is valid and will let the property owner know. The owner has 65 days to object - your application will usually be automatically rejected if they do."
So basically you'll only get to stay if the property is effectively abandoned.
Super high property tax when I'm not there? Simple, employ a cleaner on some minimal wage and let them stay there when I'm not in town. When I'm in town, put them up in a hotel. I'll probably still save money on the property tax and I can claim to be a caring employer, helping with employment in town. The city council are evil job destroyers by sticking me with huge taxes.
Scotland implements a 'second home' variant of their 'council tax' [a weird name for property tax]. Depending on area, it's a locally chosen multiple of the standard tax. But that's based on whether people declare another property and there's a lot of overhead in policing it. I doubt if it actually raises any extra net income.
But what if your empty property is actually from a relative who recently died and the estate is being finalized? Does that get hit too?
It always sounds simple to just slap extra taxes on rich people (who always happen to be defined as someone other than yourself), but that often leads to unfairness to decidedly non-rich people.
Rich people always find a way round these things - they pay lawyers and accountants to make sure they can. No public policy will ever fix that.
It's a highly regressive tax, and utterly negligible when considering prime real estate in areas like London.
In a macro economical sense Canada already profited from getting foreign $ invested in buying those properties anyway, time to make Vancouver livable.
Doesn't that kind of help the problem though? Because now someone who would have to rent an expensive apartment is now basically living rent-free in a home. If enough people did this, it would help alleviate the issue.
I agree with your point though, and know people who do this. They are "caretakers" who basically live rent-free to make sure the place doesn't fall apart. The occupancy idea sounds good, but it seems like a logistical, administrative pain to enforce.
The fact that Florida has no state income tax is an even bigger incentive to actually reside in Florida if you have a lot of passive income coming your way.
We have always had areas where the cost of housing was too high but the reactionary idea of taxing it to death is in effect the idea of that some property rights are important but others are not.
If any such idea was pushed then be sure that protection is applied to citizens of the country involved. Even this is dangerous as it tells foreigners that their money is welcome but their rights are subject to the whims of the times.
The real solution is, build more places to live. What is preventing the building of affordable housing? Find that and fix that. The response is far more proper and rewarding than trying to force someone out of their property because you think they don't deserve to own it if they don't live in a set amount of time
If you take the net the fisherman wants to use and string it up as a hammock, you're going to eat fewer fish later. If you take the blacksmith's tongs and use them to crack walnuts, you're not going to get that handful of nails that you wanted to build your house.
Property rights alleviate the tragedy of the commons, by taking resources with multiple possible uses out of the commons and dedicating them to uses other than just the one with the highest immediate value.
It should be obvious that you can't plant a field on the same land footprint as the foundation of your house. You can't build a road over it at the same time that it's under an apartment building. Property rights are part of our system for resolving the conflicts behind multiple competing exclusive uses for any particular thing.
They are not absolutely essential to democracy, but they are the best solution we have yet tried for resource allocation in a specialized economy, and democracies tend to fare better when there is enough prosperity to spread around to everyone.
If you put gold in a vault, it retains its value. But it cannot be used productively. If you instead loan the same gold out, you can charge interest, and some of the value generated by the gold performing its productive function as money will diffuse back to you via trade.
As a whole, the entire economy would prefer that all tools be put to productive use 24 hours a day. But the individual Nash equilibrium strategy is to selectively employ or withhold the use of those tools for greater personal benefit to the tool owner.
In the government's role as cartel enforcer, it would be in the interest of the whole cartel for the enforcer to levy a vacancy tax on investment properties. That reduces the personal benefit of idling the productive tool, but the enforcer then also has the burden of returning that value to the economy in a productive way.
It's not like God handed down the capitalist model of property rights carved on stone tablets...that model is just one stage in the continuous historical evolution of the concept of property rights.
This punishes newcomers and rewards staying in the same property, just like California Prop 13. Have a kid and need a new place with more space? Prepare to pay punishing property taxes for that luxury. You grew up in the area and it's time to move out? Enjoy your tax! Moving from the countryside for better employment opportunities? Tax please!
Because of the strong disincentive to move, there's now going to be fewer units on the market than would otherwise be expected. House prices go up, not down, and the moving tax is likely to be regressive.
>It might not solve the problem entirely, but at least you would reduce the effect of a diminution of housing supply that is driven by these kinds of absentee owners, and that must be driving up rents, at least.
In this case it will exacerbate it, just like Prop 13. It's really a moving tax disguised as a property tax.
There is, however, a tax that will punish absentee owners but also not create distortions: a land value tax.
It's similar to a normal property tax, except it's on the value of the land only, not land and improvements or improvements only. A single family home on a particular lot is taxed the same as a skyscraper or an empty lot sitting on that same lot.
This punishes land speculators and NIMBY types, cannot be passed on in rent (normally taxes decrease the supply somewhat, so some of the tax can be passed on, but land is fixed in value and a tax cannot reduce its supply), and does not punish building like a standard property tax does. It allows cities to capture value from infrastructure improvements, such as running a new transit line.
The practical concerns are similar to a standard property tax: how do we do assessments? The great thing about it is that land is easier to compare than buildings are.
Can you explain why this would be a moving tax?
Obvious, property taxes only apply to the fraction of the year that you own a place. Are you worried about the overlapping period where you have the house on the market but haven't sold it yet?
I suppose that would be an issue, but I assume for most people, that's a relatively small fraction of time. It's not like there aren't already lots of other expenses associated with moving.
>Obvious, property taxes only apply to the fraction of the year that you own a place. Are you worried about the overlapping period where you have the house on the market but haven't sold it yet?
The proposal was to create a property tax that phases out once the owner has lived there for X period of time. Naturally, every time you sell and move you then reset this clock, so you'd pay the property tax only if you keep moving. The most monetarily rational strategy is to buy and hold forever if at all possible.
In short, the only way to trigger this tax is to move.
Sometimes when I'm at Red Door in SOMA, overhearing twenty different conversations about startups, I want to scream "We have this thing, it's called the internet, it makes it super easy to communicate from anywhere! Let's go! Let's disperse across the globe!"
I mean, I get it. Face-to-face in-person communication is powerful for building trust, and the valley runs on trust, but still.
I suspect that the current concentration of certain sectors of the tech industry in the Bay area is just unsustainable. There's an upper limit to how much companies can afford to pay for employees relative to other areas, how much employees can afford to pay for housing, and how long commutes they'll tolerate.
I don't think building more is a panacea that would suddenly mean two-bedrooms in Cow Hollow rent for $1,000 in 2017. That said, restricting market rate construction certainly only makes things worse. And building more would help at least a little.
Like many Vancouverites on HN I am studying for a comp sci degree, and want to work as a developer.
I accept that I have to make sacrifices to keep living in Vancouver, such as:
-Living in a suburb (like Burnaby) -Getting roommates/a shared room -Living on a bus route instead of being a 5 minute walk from Skytrain
With those sacrifices, I can find rents for $750-1000/month. $750 is the lowest one will get for a place relatively close to Skytrain, not too far from downtown (e.g. Burnaby/New West), and in a clean, low property crime area.
More and more companies are paying $70K+ for new grads (something I wouldn't have admitted in say 2012), which is about $45-50K take home assuming you max out your RRSPs. Assuming a "35% of take home salary on housing" rule, you can afford rent of $1350-1450/month (higher if you gross more).
You can get a lot for that kind of money, like a big 1 bedroom (full lease) that's 15 minutes to downtown by transit. I dare you to find something similar in the Bay Area or Seattle, especially with commutes as short and crime rates as low as Vancouver's.
If you absolutely must live in the downtown core, studios start at $1000-1200/month in the West End. There is lots of shared accommodation in Yaletown for <$1000.
I was watching CBS This Morning on Wednesday on the Seattle channel (KIRO), and there was a story about the nuns having the rent on their soup kitchen in San Francisco increased by 50%. In BC, the provincial government restricts annual increases to 2.7% (for 2016) and Vancouver does not have a ward-based system of city councillors, limiting the influence of NIMBYs far more than in SF.
There's actually not a lot of data on Vancouver dev salaries out there. I've heard ranges from $50K to 70K depending on the source.
also https://docs.google.com/spreadsheets/d/18UwaThgGikSXzinnLNHx...
tldr lol if you only start out at 70k
All of that development went to the improperly supported suburban exodus movement of the 80s and 90s.
I think Washington state's regressive tax pyramid and dependence on plebecites will still stymie progress, though; in Canada, provincial and federal governments have much more centralized power to levy taxes and spend.
There are various reasons for this, part of those reasons is that, disproportionately, the poor tend to be relegated to mass transit. Part of that is that transit doesn't make sense if you get on/off work outside of peek hours; most of the Seattle metro system is biased around serving /Seattle/. Transit systems in the counties to the north and south serve even less, have much tighter budgets, and therefore also have much less service. This is one of those self-re-enforcing loops.
With the HOV Toll Lane revealing just how horrid traffic on I-405 is (again absolute lack of urban planning), I think that you'd find many would agree about doing /something/, /anything/, except for taxing them in any way. Little do they realize that you pay 'taxes' in other ways, like having daily commutes of hell and a poor environment for their children to enter the workforce within. I know that my own career development is still severely hampered by having grown up in a suburb, without a car, and thus also with less access to the scarce jobs in the area that many (but not all) of my peers took up. I suspect that there probably weren't enough 'after school' jobs to go around though, so those who did get experience early got a head start on learning how to handle interacting with employers.
I agree with that in most cases, especially in low density wealthy cities, where people would avoid using transit even if it were more convenient, just to avoid the general population.
But in the case of several Bay Area neighborhoods the opposite is true. All else equal, in the urban core people pay a premium to live near a major mass transit station.
I guess you need a critical mass of upper middle class working people, good enough transit, and terrible traffic for this to happen. I certainly never saw transit access marketed as a selling point before moving here from flyover country in the dot-com days.
I attended many government planning meetings in the 1990's, and people were definitely anticipating the steadily increasing road congestion we've been experiencing since then. One of the big issues is that the topography in this region drives up costs. The densest urban areas are wedged between Puget Sound, Lake Washington, and Lake Sammamish, and in between there are steep hillsides and environmentally sensitive areas. Transit expansion therefore involves building bridges, purchasing land in areas with expensive view homes, and tunneling. We could raise taxes to pay for more rail expansions, but higher taxes combined with the rapidly increasing housing costs would price out many people, especially families.
Washington state is the worst state for taxes and governance, except when compared to all the other states. It works out well.
After 3 years here I've now purchased a townhouse in Cap Hill. I could have never afforded the house I just purchased in a comparable Vancouver neighborhood.
The real problem is that prices have become decoupled from incomes. The median home price is 10x more than the median household income (this includes condos and townhomes).
The only reason for this is outside capital driving up prices.
Also known as inflation OR debt issued by your govt returning home.
I now live in a city where the cost of living is substantially lower, and I make substantially more (about 100k). I could make more, but I don't have to. I spend about half my time traveling, something every Vancouver person aspires to do and yet never does. Leaving that city was the best choice I ever made.
Certainly I will visit in the future but I will never move back.
I don't think that you're ever going to have a problem finding 1 bedroom accommodations in Vancouver because that's what developers predominantly build. Eventually you'll probably want to get married and have kids, and then you'll realize that the GVRD has nothing for you.
The detached home market now largely belongs to rich Chinese immigrants who made their millions outside the country; you'll never be able to compete with these folks working in the Canadian economy and paying Canadian taxes. That will largely rule out Vancouver, Burnaby, and by the time you graduate, New West, Coquitlam, Poco, and Port Moody. This isn't even a matter of stretching anymore - this market is completely isolated from CHMC policy now because the prices are beyond what Canadian home buyers could ever leverage.
Developers have little incentive to build 3 bedroom family-friendly condos, so you'll have a hard time finding those, too. I wanted to buy one recently and it was going to cost about $700000. My current 2 bedroom would sell for about $400k, but I don't think that I want to stretch that far on a single income, even though it would mean I could get my kids their own rooms.
And really, is Vancouver so great? The mountains are nice, and the downtown is nice if you're young. But it's a trap for the young - through well-intentioned tolerance and bad public policy we've created a city that is hostile to young families. Live anywhere else in North America and you'll enjoy a more favourable cost of living and/or a better lifestyle.
I'd leave in a minute if I could.
2. Proxy companies that maintain RE portfolios for overseas clients
3. Complete unwillingness of the government to do anything about this. That's the root of the problem.
I think the problem is deeper than this, though. Most people in Vancouver actually want prices to stay high; there are a whole lot of home owners in Vancouver who are counting on that $3M cheque for their house to pay for their retirement. Its the provincial government that wields the legislative cudgel here, and they're going to listen to those home-owners waiting for their Chinese-exit. Worse, much of the BC economy is now based on real-estate; selling it, buying it, rebuilding it, and renovating it. We've built our economy on selling rich Chinese people our homes. If the provincial government intervenes and fixes house prices, it would probably harm the construction and real estate business; it would be political suicide.
I moved to Vancouver shortly before the .com crash. Worked for a number of companies, primarily doing low-level system programming, climbing from 50K to 120K in 5 or so years and periodically trying to do my own thing. One of the attempts worked, got a good exit, at which point started looking at upgrading from our pretty decent Burnaby condo to a house.
Being a true nouveau riche, we scouted everything, including most expensive areas like UBC, Point Gray and West Vancouver, talked to the agents, looked at the building lots, spoke with architects - the whole shebang. It became absolutely crystal clear that the Vancouver real estate is just one big parking lot for Chinese money. And they don't just park them there, they also bring their gambling habits with them, constantly flipping what they have and perpetually warming up the prices. It is in-your-face obvious once you take a close look at what's going on. You don't even have to prompt agents to relay the stories of how they guide groups of Chinese government suits through dozens of properties, all of which they end up buying above asking. It is absolutely INSANE. As it is ultimately disgusting.
In any case, we looked around once again, said "fuck it" and moved elsewhere. Mountains and good restaurants can't offset the fact that you feel like a lower middle class even when you don't have to work ever again in your life.
It's a nice place when you are young, renting and have no attachments, but I would strongly discourage from trying to settle there on a more permanent basis.
The US is broken, politically and socioeconomically. The Senate will block any bills for a constitutional amendment to get money out of politics, and a Constitutional Convention will mean all amendments will be on the line, including the 1st Amendment (libertarians will cry "freeze speech") and 2A (gun owners will cry "the gubmint is taking our guns away"). I really don't see a bright side to America's future. Canada has been a well-run country, even under Harper, and I am optimistic about what Trudeau Jr. will be able to accomplish.
Calgary represents everything that I think is wrong with Canada--sorry, Nenshi, I like you, but the people of your city are holding Canada back. (the CPC, putting the economic eggs into the oil basket, and so on.) Plus, Calgary has less dev opportunities than Vancouver since everything is dependent on oil and gas.
I don't like the weather in eastern Canada. The winters are too cold, the summers are too hot and humid. By the way, it's much more common to have sleet, ice storms and hard-packed dirty slush/ice than freshly fallen snow. The rain keeps everything green and the temperatures in summer rarely gets above 25 degrees. So much better than 30 degrees (with 40 humidex).
Toronto too sprawling of a city, and amalgamation (just like it did in Ottawa and Halifax) has pitted suburbanites against urban dwellers, as manifested in Rob Ford and John Tory. Also, the 905 belt carried Mike Harris (Ontario PCs) in the 90s, and his "Common Sense Revolution" permanently sabotaged Toronto's public transportation infrastructure.
Quebec is a beacon of corruption. Remember that SQ officer who wasn't charged for a fatal hit-and-run with his cruiser? Montreal is owned by the Mob. Mr. Sidewalk, the Big Owe, etc. The infrastructure is literally crumbling (like the Highway 19 overpass collapse in Laval in 2006) because of how corrupt the city of Montreal is.
I'm young and I don't want kids. I do not believe that yellow peril is the driving factor in housing costs. Certainly it's a factor, but no one can say how much of a factor it is without solid data. I'm staying, and you can't stop me!
:-)
Fair enough; its a nice city if you're young and you don't have kids. I think a lot of your criticism of other places has to do with things that don't affect you on a day to day basis; America's lax gun laws aren't going to have nearly the same impact on your life as the much better software dev work you'll find there, the higher pay your work will garner, and better housing opportunities you'd have in the US.
I just hope you don't wind up like me; 20 years of C/C++ dev experience in desktop and embedded, and I have no idea what I would do if my current company here in Vancouver went under. There just aren't a lot of job opportunities here, and moving would mean giving up custody of my kids.
When Obama was running for president in 2008, his stump speech included this line (paraphrased): "If a child can't read, that matters to me, even if it's not my child. If a senior citizen can't afford his prescription drugs, that makes my life poorer, even if he's not my grandparent."
I would be be living in a city (SF, Portland, Seattle, SD, Austin, Boston, NYC, Chicago, take your pick) with massive social, racial, and economic disparities that make Vancouver look like one of those Nordic wundercountries. I would be living in a city, and a state, and a country, with levels of political dysfunction and gridlock only seen in countries like Korea or Chile. That dysfunction is holding the country back in overall quality-of-life. The rich have magnificent lives, but for the poor, it's hell to live in America. That makes my life poorer, even if I'm making $100K and drive a Tesla P90D with Ludicrous Mode. (That is if I live in a state that hasn't banned Tesla sales!)
What the gods of Mt.Olympus do does not matter to the common folk. Macro policy decisions to do things like go to war in Afghanistan only indirectly effect your tax bill, and if the news didn't report it and if refugees didn't immigrate, would you even know it was happening. That is real effect of what your worrying about.
Go live & work in Seattle for a year and you'll quickly come to learn there is no real difference between there and Vancouver. If you change the street signs and some brands, you wouldn't be able to tell the difference. If you really don't like it, you can always move back. But as a learning experience, you'll find it valuable for your world view, your career back in Vancouver and your wallet. If you have student loans, that exchange rate will be amazing to pay them off, and you could collect a down payment for a Vancouver 1 bedroom condo far faster. I used charles schwab debit cards and I paid no exchange fees paying off my canadian student loans.
Bread and Circus crap like guns and such are an entertainment sideshow and policy makers will do whatever they actually care about without much fanfare. In practice you will never see a gun on a civilian in NYC, SF or Seattle and people speak whatever is on their mind. The weather is also amazing in SF.
As a side note, this shouldn't really factor into your calculations. Either way you're paying the tax
http://www.cic.gc.ca/ENGLISH/immigrate/business/investors/in...
I mean, look at the Bay Area. They command some of the highest rents in the country, and many tech-sector workers are able to "get by" because of higher salaries from their employers. Of course, if you're not in the tech sector, you're forced to live in more affordable outskirts, like East Bay.
In NYC, they have fantastic transit, so if you don't live in Manhattan, you can still get to work relatively easily. That infrastructure investment has helped NYC maintain its desirability.
Meanwhile, Toronto has a similar problem to Vancouver, except we're building tons of condos. As long as you adjust your outlook to realize that you may only be able to afford a condominium (to buy or rent), you can make it work. Otherwise, you can move to the suburbs, but our transit is garbage, so good luck with that.
Of course, I've simplified my points and glossed over the nuances. But I think the solution is really: 1) Higher density housing (i.e. high-rise residential) 2) Much better transit 3) Options for affordable rent-subsidized housing in these developments
If you do those things, I think you'll make it easier for millenials to choose to stay, and still encourage a diverse community that's not made up of just high-income tech or finance workers. Places like Hong Kong, Tokyo, NYC, Singapore, and many more seem to be thriving cities, and I think those are the factors they have in common.
What changed is the respect the builders have for the people buying and living in their buildings. 5-10 years ago, condos were a bit more rare, so a construction company had to try really hard to make their condo appealing. They worked slower and the architecture was much more livable. Spacious units, sensible parking and elevators, and catchy amenities like pools and fitness rooms.
Now, they pump out condos like a sweatshop. Instead of 8 units on a floor, there are now 12. Instead of a pool, you get a gym, and instead of a fitness room, you get a yoga studio. Elevators that serve more than 30 floors are too expensive, so those 50+ storey condos need 2 elevators; one to take you from 1-30, and another to take you to from 30-50. Every single new condo in the last 5 years is in litigation with the developer due to issues with the building. Contractors like plumbers and electricians know the game now too, so every bill from a contractor will be $999 (regardless of work done) because anything over $1000 requires board approval. Without a strong property management team, I expect half of the condos will be bankrupt within a decade.
If you want to buy a condo, buy one in a building that is more than 10 years old. They will have sorted out the engineering problems by then and their budgets will be inline.
1) Mailboxes are in the basement, so you can't check on your way in.
2) Each unit having a loud spaceship/heat pump instead of one central one. Heat pump is leased, not owned by the unit, so you're paying $45/month in perpetuity. Maintenance not included.
3) Submetering of electricity, where a quarter to half of your bill is in the delivery charge from a random power company (times x units of the building, instead of one for the whole building and incl. it in condo fees)
4) New condo board isn't allowed to fix/improve various promised things until the builder fixes it. Builder waits for it to time-out for 3 years and then the Board has to arbitrate/mediate it with the Builder. Meanwhile, condo board can't touch it.
5) Builders signing exclusive contracts with telecoms, so you can't get service from anyone else.
6) Locks not keyed right, so residents' keys can open mechanical rooms/rooftop access
7) Gym on the second floor, so residents below feel like they're living in a bowling alley
In Manhattan, subways run all night to the different boros, Metro-north, the LIRR, PATH, NJ transit etc. run through the night.
People say NYC is expensive, and living on the upper east side or west village can be expensive. But plenty of safe, cheaper places are a 20 minute train ride from Manhattan, and even more are a 30 minute train ride (and so on). You don't get options like that in the Bay Area.
You can rent a 100 sqm for only 1000 euros per month!!!!
You can't get 40 sqm for that same amount in Paris.
Here in Boston I'm paying 3700 euros for (poorly maintained) 90 sqm, of course split with five people. Maybe it is time to consider a stint in Berlin.
Are there any resources you would recommend to learn more about the city, and the tech scene?
I'm guessing the equivalent of their hipsters got wise to it and drove up prices a la the gentrification you saw (compare the between the dirty-grimy NYC of the "Taxi Driver" 1970s vs the clean power-tie NYC of the 1980s bond-trading years, or the early 2000s Williamsburg where the rent was somewhat reasonable vs 2010 where anything on the L costed literally 3 times as much because every white kid with a fixie had his parents pay his $2600 rent, etc. $800/mo on a split isn't too bad for Boston if you're anywhere close to a decent spot on the T, considering the supply/demand (it's arguably the biggest college region in the US - between Cambridge, Boston and BC in Newton it's probably the densest student:non-student ratio in the US). Berlin had that vibrant feeling that's hard to explain but yeah the tech scene was (and hopefully still is) spectacular, especially re: the hardware hacking scene when I was there and it's certainly worth a visit.
Edit: http://ccc.de/ In math if you solve something major, odds are you'll wait till that years AMS Symposium to present; if you crack the PS3, CCC is where fail0verflow went to present. (Don't write them off because of their l33t-name, these guys aren't script kiddies -- these hacks are worthy of PhD theses if you see the detail of reverse engineering they go into.).
(Maybe I shouldn't say so. Keep the secret to those who know.)
http://www.thelocal.de/20150707/politicians-struggle-to-keep...
And while rents are still cheap compared to other large western cities, they went (and are going) through about the same curve as these more expensive cities - it simply started lower here.
Maybe you have an European or U.S. citizenship, but they're harder towards South Americans. Also, software development salaries weren't something to write home about last time I checked (that was some a long time ago admittedly).
Edit: According to Glassdoor, Berlin Software Engineer Salary: €48000 (average)
Sydney Software Engineer Salary: $80000 (average)
My grandfather was German-born and they didn't grant the citizeship to him, and I remember the ridiculous requirements he faced trying to get it (and he was more German than most actual Germans, a Fischer Reuter Spangemberg and more German surnames all the way down)
http://www.spiegel.de/international/germany/skilled-immigran...
"The paperwork is nightmarishly complex and requires a wealth of information, with endless pages and extra documents. Sometimes translations are required, sometimes not. In fact, she no longer sends the papers off without consulting an expert. Anders works as the human resources manager for Adidas. She is looking for skilled workers in Europe, the Middle East and Africa. These days, even a company like Adidas rarely finds new employees in Germany, especially IT experts and designers."
I also know a lot of Israelis who got German citizenships via their grandparents, but there might be special rules that make it easier for victims of the nazis (and their descendants) or people that fled the country.
Either way the salary is probably never a reason to move to Germany (I don't think wages are higher than in any other western country), I meant more like that it's not a reason NOT to move in that particular example.
Visas are pretty easy to come by in Berlin - google "EU Blue Card".
I can't remember where I heard but the city controls the rental rates. Don't want to pay more for a property than you can recoup. And you don't want to leave it unoccupied less you come back to find it squatted; and they have rights as well.
Because it is so highly regulated its not a great investment.
Out here in the burbs, it's a different story. A development just down the road from me suffered very badly in the downturn, with houses losing as much as 50% of their value. Some of those owners will never be above water on their houses. I'm very glad I chose not to move from my townhouse into a single family home a decade ago, as prices soared, even though I really wanted a place with a mad scientist basement workroom. And as my friends retire, most are moving to warmer and/or cheaper places.
As far as I can tell, they simply don't. I don't think there is any city that "deals with it", or even tries to, in any way.
Every city I can think of that has value in living in, is experiencing explosive bubble-like growth in them. Even the supposedly "cheap" or "low cost of living" cities are undergoing this process.
I think most cities secretly want this to happen, since it leads to higher property taxes and drives out members of their community they consider less desirable.
The elephant in the room is why this happened. Everyone talks about "foreign speculation" but in fact most of it is not speculation at all. In mainland China, Vancouver is widely viewed as a nice, quiet small city, good for students and the elderly. It's not a place for "real" work. So they buy homes there to live in part-time. It is quite normal to have the mother and child live in Vancouver while the father continues to work overseas. They pay almost no Canadian tax as they have no Canadian income. With their child in school, the parents can eventually claim permanent resident status thanks to the family reunification program and they can expect to retire in Canada. It's a big win for them and they see nothing wrong with it.
To summarize: introducing vast income inequality has distorted the Vancouver housing market and drastically altered the demographics of the city, making it unaffordable for the people who actually work and pay taxes there.
[1] http://www.theglobeandmail.com/life/home-and-garden/real-est...
It sold twice recently, within a couple months, by the same realtor. They always collect the rent in cash, never issue a receipt. I know a racket when I see one, so I had to figure it out.
First, somebody buys a house in cash but puts it in somebody else's name, like a child or spouse. They get lots of mail sent there. This is to establish primary residence exemption on capital gains when the house is sold. They make it look like that person is living there, when it's actually being rented. Two untaxed sources of income: undeclared cash rental income and the inevitable capital gains on the sale.
As far as investments go, its a sure win. And I have reason to believe I'm renting one of these properties. It happens to work out well for me though cause rents pretty reasonable.
Do you see that by not requiring a receipt you're helping that racket?
one way to address it, and I know this is crazy guys just bear with me, is that these tech leaders could start paying more money. No hope to afford a condo at 75k a year? how about at 150?
Vancouver is simply not that much better than Seattle that I would go back. The salary difference is just too high, especially with the favorable tax situation in washington and the lousy dollar.
It's odd: it's like the state understands that banks are bastards.
Montreal has some issues with organised crime but nothing compared to the organised crime of banking / money laundering through land. I don't have to pay some gangster $1MM for a shack.
Leave the boomers to their trinkets kids. Walk away. They need your labour, the rest is just paper.
I'm going to reuse that! I wish this kind of thinking about economy is more main stream.
Other people don't seem to really care about weather extremes or scenery, etc. I have no insight into these real estate investors dumping money into property, sure if they aren't living there, there's some other factors involved.
That said, having grown up in Vancouver, I'd consider Montreal - seeing the sun in the fall/winter is a really nice concept I've gotten used to. I've gotten used to harsh cold of the east coast, but I never got used to the dreary vast grayness even though I spent most of my childhood in it.
The city was a great mix. Big enough to wow a hick like me, but also felt accommodating, friendly, and cosy.
Great leisurely bicycling next to the river and canals.
All the french makes it feel like I'd traveled much further. I also tried making an effort to speak it, and unlike when visiting France, people actually had the good taste (or angelic patience) to indulge me.
It was somewhat expensive, but not obnoxiously so.
I know tourist experience a place differently than residents, but I can totally get it why it's a desirable place.
I did this with my wife for an anniversary. We're most certainly coming back when hitting a nice round number again.
Daycare services in the province are absurdly cheap compared to anywhere else in the country.
- Dumbfounding Bureaucratic issues. Once when I went to University, I was able to prove to the Provincial Gov, that I lived in Quebec, but the same documents were not accepted by the Federal Gov to prove that I lived in Canada. Meaning I could prove that I lived in Quebec, but not that I lived in Canada.
- And it was named the most corrupt Province in Canada. http://www.macleans.ca/news/canada/the-most-corrupt-province...
http://www.cbc.ca/news/canada/montreal/burgundy-lion-oqlf-1....
Also, as soon as my friend's company who does most of her business to the States got to a certain amount of employees, they had their agents come in to switch out all of the keyboards and software into French, and advised to make internal emails communications in French as well.
>A spokesman for the OQLF said the letter is only for information purposes, and there are no penalties involved. The agency's goal, Jean-Pierre Le Blanc said, is to let business owners know that French-language versions of such promotional stickers exist.
>"This is one of about 300 to 400 letters we sent this month to businesses," said Le Blanc. "It's not an investigation. It's not a complaint. It's an incentive."
I suspect that the keyboard anecdote is inflated.
However, the official work language is French, but that is only because we don't want the majority to become second-class citizens..
You know what, I'm getting emotional on the Internet.
I'm going to stop arguing here. It's not productive, and there's nothing to prove.
In any cases, feel free to message me in French if you need practice.
The industry in Vancouver has since recovered, but with long-term stressor's like the housing issue; another jerk of the economic chain might catalyze another exodus.
The vast majority of Canadians outside of Quebec and the Ottawa region do not speak French. Sure, they all took French in high school, but most wouldn't be able to hold a conversation let alone conduct business in the language. Perhaps in some types of jobs with a lax rules about French proficiency, it would be OK, but you are unlikely to find a job listing in Montreal that doesn't state a requirement or "strong preference" for high-level French communication skills.
In a few short years it went nutty and prices spiked and they've only been going up since.
Those retiring age sold their places in Van, moved to the Okanagan and prices there spiked as well.
Weather is maybe part of it, setting and scenery certainly are too. Easy access to the Pacific Rim is also part of it.
I don't intend to do it, but for curiosity's sake: How does one go short on houses?
"I'll pay you to let me borrow your house and sell it to someone else. Later, I'll get you an equivalent house." Never heard of anyone doing such a thing, but at the right up-front payment, I bet someone would take the deal.
The problem with going short on something like housing is the market can stay irrational longer than you can stay solvent. This bubble is being pushed by buyers who are not looking to make money, but to get money out of certain countries and providing a safe haven to flee to. Unless this changes then things won't get more rational.
If you had enough money you could short the banks and then whip up a media campaign of anti-foreign investment and xenophobia. Scare the market enough and you might get it to crash.
San Francisco is an outlier given the extremely dense concentration of high paying jobs which drove housing into orbit. This makes it much ''stickier''. However, this entire model is dependent upon the public markets giving tech companies sky high valuations, which could change. Already I see many of the more proactive venture firms scouring outside of SF for deal flow, particularly in these gentrifying second tier cities like Austin, Nashville, Minneapolis, Kansas City, etc.
San Francisco's housing policies drove housing into orbit: http://techcrunch.com/2014/04/14/sf-housing/. There are numerous other discussions of this: http://www.amazon.com/TheRent-Too-Damn-High-Matters-ebook/dp....
We have the technology to build lots of units (steel-frame construction, elevators): http://www.slate.com/blogs/moneybox/2013/05/03/silicon_valle.... "We" just choose not to use them.
I haven't found any examples, except in already hyper-wealthy neighborhoods, or in 40+ yr old buildings in cities that became significantly less desirable, due to very high crime/poverty/etc. (Detroit, parts of Chicago, etc)
---
> (From the Slate.com article you linked to) What should be happening in Silicon Valley is an enormous construction boom. There should be oodles of blue-collar jobs knocking down suburban-style single-family detached homes and replacing them with attached townhouses. Right by Caltrain stations, there should be huge apartment towers going up. Some people might get dispaced out of the individual house they live in, but generally should be able to afford to stay in the area
Is that a thing that has ever actually happened -- even just once? It sounds like a false narrative.
In the real world, the creation of the Highrise adds more units (increases supply) but does not reduce demand -- because the presence of the new building makes the neighborhood more attractive, so demand rises even more than the supply was increased, driving prices even higher. If a hypothetical high rise has 20 units, the act of constructing it increases demand by 40 units (20 of which the building absorbs, 20 of which are dumped back into the already-high-demand neighborhood.
I'm in the "low cost of living" Midwest, and even here this occurs. A developer pays $150k for a single family 4bed home. Tears it down, and builds 3 condos on the site, each condo lists for $250k - $300k and is only 2bed each. The previous occupants are guaranteed to be displaced -- even if they could downsize their space needs, they can't afford to double their housing costs.
Where is this hypothetical place where these brand new condos cost equal-or-less than the old single family house that was just torn down?
For more dramatic numbers, including low prices and a booming population for many years, you should look at Houston, Texas, Hero Of Housing Capitalism.
But that's not true, according to your own article.
From your link: "in the core of Seattle, rents went up 3.9 percent year-over-year in September."
> rents dropped this quarter in all but South Lake Union, with the average decline hitting $59 a month. Further, when all of these submarkets are considered, the average vacancy rate increase was nearly a full percentage point.
2015 new construction was huge, the biggest since the late eighties/early nineties, and construction for the next couple years, based on filings, looks like it's going to continue that way. So it's likely that apartment prices will continue fall or hold still.
There's a lot of this, yes. And the suburbs aren't necessarily very suburban: I live in a 30 floor condo tower in Burnaby, and within 2 block radius there's a dozen similar towers and twenty more 30-60 floor towers in various stages of zoning hearings (8) / building approval (7) / digging big holes (2) / towers going up (3).
There are two major phenomena at play in Vancouver:
1. Across Metro Vancouver, the supply of land for single family detached houses is very constrained; this is pushing prices of detached houses up dramatically.
2. The City of Vancouver proper is very hostile to development, due to a toxic combination of NIMBYism, height restrictions to maintain "view corridors" of the nearby mountains, and social activists who think that building more housing will somehow make housing less affordable.
But if you're willing to live in a condo and you don't mind living a 20 minute train ride away from downtown, the cost of housing is far more reasonable than hysterical media reports would have you believe; and unlike detached houses, prices of condos have barely kept up with inflation over the past decade.
Vancouver was plagued by "leaky condos" in the 1980s and early 1990s, but that's over now: This happened due to a rapid expansion of condo construction using building designs suited for a drier climate. There have been no signs of problems in newer buildings.
Stata corporations are normally supposed to have depreciation reports prepared in order to identify upcoming costs; unfortunately these can be waived with a vote of unit holders, and most do. The best remedy here is to not buy a unit which doesn't have a recent depreciation report.
no space to start a family
In terms of $ per unit floor area, condos are cheaper than detached houses. Sure, you don't get a lawn... but you get access to lots of other amenities. I'm not convinced that raising kids in a condo is as hard as people think.
There's construction everywhere but the price of living in those new buildings is even more than the increasingly expensive older areas and a lot of new construction has begun with what seems like little to no consideration for its impact on traffic.
Perhaps developers and the city expect people to use the limited metro system and other public transit but few people, in practice do.
I can't be that upset though, my wife and I are leaving for the suburbs soon with no plans to come back.
There's a lot happening in LA in terms of the tech scene, but it's not enough to outweigh the overwhelming cost of attempting to put down roots there (home ownership is a largely unobtainable goal, insurance of all kinds is expensive, every neighborhood suffers from traffic congestion and on and on).
Everyone.
https://positivemoney.org/issues/house-prices/
The issue described is not unique to Vancouver, it's a worldwide phenomenon, lots of desirable locations across the globe are facing the same (from Auckland to London to Sydney to Zurich), even in my hometown in Montevideo, Uruguay, houses are going for ridiculous prices.
A good measure on whether housing is overvalued (IMO) is how many salaries it takes to buy a house. A good salaries to house ratio was something like 4 yearly salaries, it's currently over 10 for England, with some places going to 20 yearly salaries for a house:
http://www.theguardian.com/money/2015/aug/06/average-house-p...
As someone who doesn't own any property, I really hope the housing bubble explodes. OTOH there are people who have gotten very wealthy just by inheriting and holding property, who must dread the same scenario, but where can they safely store their value? As mentioned, interest rates are very low or negative.
Where were you 5-7 years ago?
What every company in Vancouver seems to want is an employee who is desperate for work but also independently wealthy. That might seem a conflict but in Vancouver it is normal. There are thousands of young people here who are supported by parents who have enjoyed the rise in house prices. They are desperate for work, but don't much care about the pay because they have support. Hootsuite's problem is that many of those kids are now in their thirties, mom and dad have moved, and they want to have an actual life of their own. That cannot happen at 30k in a city like Vancouver.
(Lets see how long it takes for this comment to hit a nerve. Hoot is a social media company with eyes everywhere.)
Understandably, employers in Canada want to save money by competing only with their Canadian neighbors in terms of salaries, but this attitude seems extremely shortsighted to me, and results in a vicious negative feedback loop: companies offer lower salaries -> low availability of higher tier talent -> companies under-compete -> companies can now only afford lower salaries -> rinse and repeat. I believe this has been having a profound effect on competitiveness of the Canadian tech industry as a whole (see Blackberry/RIM as a prime example of this phenomenon).
As a recent Waterloo grad, I've witnessed the brain-drain first hand. Everyone I know from school who's any good has left for lucrative US positions, and I'll probably be joining them soon.
We're not talking about Oklahoma here.
That's a perfect example. You've assumed that I meant "race" as meaning there where different races in either country. I mean to speak about the concept of race generally. American's are obsessed with race. It is part of nearly every discussion and aspect of life. In Canada it isn't such a big deal. You don't hear Canadian politicians ever speak of wining "the black vote" or caring that someone is "the first jewish person to win a primary." As a canadian I find such phrases impolite, almost difficult to type.
Look at the new defense minister. If he was named to head the US DOD FoxNews would scream 24/7. In Canada, barely anyone noticed. Those that did did so only because the guy looks like the toughest defense minister on the planet atm.
http://www.readoo.in/2015/11/meet-canadas-new-badass-defence...
I think the problem is that you experience US culture via the media, and you experience Canadian culture in real life AND via the media. I don't feel that everything is about race in the US, but obviously it's a pretty damn big deal in the media right now because of globally-known events that have happened really recently. Would you have said the same even 5 years ago?
In a bar in France one time, a group of drunk Canadian women started chatting me up, and the more drunk of the group kept going on and on about how terribly obsessed with celebrities all of us Americans were. She went on and on for 20 minutes about how it's all we care about and all we talk about. Leaving aside the irony of the situation, she refused to listen when I said I simply don't care, it's not a part of my life, and it's not a part of the lives of anyone I know.
But that's what you get when your biggest impression of a place is from its media. That's not to say that it doesn't reflect something real, just that it's not the whole picture.
Other then that, it's not too bad.
EDIT> It's demoralizing.
The tech companies in Vancouver haven't increased pay in step with skyrocketing housing. If you can find data on employee pay in the tech industry (good luck) you'd find it'd be fairly consistent. Compared to housing prices in Vancouver, you'd likely be looking at hockey stick growth. That's the disconnect.
If Hootsuite paid minimum wage, but cost-to-live was free, then it's a really good deal for developers.
Besides, you're ignoring the rest of the local economy. Tech is only a small part, and fixing it for one small sector isn't going to do much on a macro scale.
Very convenient. Not attempting to fix a problem until everyone else is onboard is a great way of not doing anything. If tech companies want to retain talent, pay for it. Don't lambaste the city or the economy. There is nothing more hypocritical than a CEO of a profitable company complaining about retention. If you are profitable then you can afford to pay your people more. Complain about the city when you cannot find the people needed to make ends meet, not when they are inconveniently expensive.
It solve the crisis for the people you pay. It allows them to live rather than move elsewhere. If all employers did the same, then it wouldn't really be a crisis.
If you're interested in working on cool engineering problems in Toronto, e-mail me.
Yes, it's not Vancouver city, and yes, it's not a house, however via skytrain you can be downtown in a little over 40 minutes and get work done on your laptop in the meantime.
You don't need a house to survive, it is nice, yes, but many many many millions of people live and bring up families in apartments in Europe, so it is definitely doable.
Of course it's annoying to think that 12 years ago you could get a nice house in kits for 400k, or a 1000+ sqf condo downtown for 200k, but what can you do, same deal as buying a lottery ticket or joining a startup that makes it vs one that doesn't. The mountains and nature and weather are available whether you live in vancouver or in one of the suburbs
Metro Vancouver is over 2m people, Surrey is the largest city in the metro area actually, even if Vancouver proper becomes a "haven for the rich" there's plenty of other areas where one can live, the problem is that a lot of tech companies can't seem to see beyond "gastown is trendy" or "let's go to yaletown" or "downtown is where it's at", when they could easily set up in other skytrain-served area and attract more folks that don't like the commute downtown.
It is true, what you could do 10-15 years ago, buy a house within 30 minutes of downtown on a normal salary is not possible anymore (just like it wasn't possible back then to do that for a house in Point Grey) but it is still quite possible to live here, given the amount of immigration that the area is still getting.
Townhouses and condos in Surrey or Langley are still very affordable, the commute is annoying, but from what I hear from friends in the valley it's not like traffic there is that great either, at least up here you can sit on the skytrain and get things done or read a book rather than be stuck in traffic and have no alternatives because there's no decent public transit.
This has arguably long been the case in some places like Manhattan. Going back decades, living in a crappy tiny apartment in Manhattan rather than, heaven forbid, Queens was a thing for recent graduates. But, at the same time, tech was generally moving out of metropolitan Boston and the computer companies were mostly out on the 128 and 495 corridors.
Sure they did. I knew relatively few people who chose to live in Boston/Cambridge after graduation in the 80s. Yes, some of this was because of the commute to their jobs in Metro-West. But I knew lots of people (including myself) who never seriously considered living in the city post-graduation.
As you say, places like Kendall and Central Square weren't exactly desirable locales. Both the state of much of Boston/Cambridge (and even Somerville) and the general attitude toward urban living among certain demographics has obviously shifted.
This is largely due to politics. If you were a speculator considering building a rental apartment building, you face:
1) Rent control. (Those cities and counties that don't have it are all considering it.)
2) Requirements that you allocate a percentage of your units as limited to "low income housing", with those units becoming permanently constrained
3) permit costs, neighborhood opposition, and other city-specific barriers
4) high material prices and construction costs (e.g. earthquake and flood codes)
5) high labor costs
The current article seems to be the original source, so we'll keep it.
In Brazil, real estate prices are completely out of touch with median income (at least, the rents are still affordable, because the typical landlord owns only one or two places and simply needs to rent to cover taxes and maintenance, he cannot sit on them).
Economists and governments paid too much attention to the inflation of the Big Mac and forgot real estate and other hard assets. Also, govts have a huge incentive to allow real estate bubbles: tax revenue, abundance of blue-collar jobs while the construction frenzy lasts, illusion of prosperity for whoever already owns the home, etc.
Yet another possibility is that too many people need to put dirty or excess money in a 'safe' investment. I hear that Chinese buy a lot of real estate in London, Vancouver, etc. At least here in Brazil, the money you have in a bank can be frozen in a milissecond if you are suspect of a crime, but controls over real state are very lax, so a lot of corruption money goes into real estate, which fuels the bubble.
If we Tax of empty housing for prolong period of time, like 6 months, which should force the owner to rent out its place, balancing some of the supply and demand issue.
IT DOES NOT solve the housing issues. Far from it, but it is one fair way to get more money to government and stop the price hiking so much.
We love it here, but we have accepted that it is not where we will be able to put roots down.
My partner and I work remotely, we'll enjoy our time here then buy a home elsewhere...
Like maybe Hawaii. :)
I appreciate why some people are attracted to it but I could easily see it getting old quickly even if living in a condo near a beautiful beach and ocean initially seemed like the perfect life. (OTOH, it's sure better than Florida IMO.)
The other, a chef in a touristy restaurant. Made something new and different every week. He's another story - no idea why he'd give that up!
http://www.economist.com/blogs/dailychart/2011/11/global-hou...
Detroit probably experienced a R.E. bubble in the day...
That said, I'm not predicting that outcome myself -- at this point, I would not want to place any sort of bet on that market.
Everything is still disputed, but Tokyo real estate prices certainly played a part. There was no crash as such, but rather a stagnation.
Is there any really viable plan to get the foreign owned real estate on to the rental market?
Not that you're wrong -- we bought in the bay area. Our offer was the best of 13, and narrowly beat out an all-cash offer. Of course, you have to have the right seller to be willing to "risk" selling it to normal people who have to borrow to buy, vs the sure thing of an all cash offer.
Guy across the street bid on tons of properties before buying. I think they had the best of 34 (!) offers. RWC.
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If it's alright Then how come you can't sleep at night? In line for a number but you don't understand Like a modern man
I'm a modern man I'm a modern man I'm a modern man I'm a modern man
In a Law of Rents sort of way, I can't help but to think that these phenomena are self indictments. If land prices are driven by those who can extract the most value from them, and the result is that wealthy people land-grab property that even remains vacant in some cases, or otherwise is a living space for a twenty-something working in finance, law, or medicine, who will eventually move away and be replaced by some other twenty-something in finance, law, or medicine, this seems to say a lot more about failures on the part of the wealthy members of older generations to innovate. If the best a use of that land is dormancy, sitting like gold in a vault, instead of being a place where a working class father inspires a child or where a mother teaches her son or where an artist, like what David Byrne did in the Talking Heads days in New York, transforms a space into a freeing creative studio ... isn't this embarrassing to them (the wealthy older generations)? It's basically an admission that, with the huge wealth endowment and peaceful world they were handed by their parents' generation, they managed to squander it to the point where the best use of land, the most inventive thing they can do with their money, is ... nothing. You've got two options: pour your money into consumer variation bullshit startups, or park it into assets like real estate that deprive younger generations of opportunity. It seems that wealth and a half century of the position of passively dominating in Western-led proxy wars has stripped away any sense of civic duty, or even basic shame at their failure to use capital to do anything.
THIS!
I know it's considered bad form to chime in to just to agree, but upvoting didn't seem enough in this case
I think the main reasons people want to park their money in property in expensive cities are some combination of 1. uncertainty/flight to safety 2. thinking prices will go up, perhaps due to undersupply, perhaps due to genuine value to be produced in the cities 3. for some wealthy foreign investors, an asset that's not at risk of being seized by a corrupt government.
The wealthy are certainly revealing their uncertainty. I'm not at all convinced this is worse than the time when the wealthy had absolute confidence in their grand plans for improving the lot of the unwashed masses.
I think this is highly questionable.
I think it's far more often the opposite; wealthy Russian oligarchs and corrupt CCP members trying to dodge economic sanctions and Xi Jinping's corruption crackdown by stashing their cash and children safely away from their home countries.
At least the rents are somewhat affordable, tho. The gap between house prices vs rent prices is immense, compared to a place like San Francisco. You can rent a 2 bedroom in the West End for ~$1500.
have a 3000sqft house with a $600k mortgage.
my yearly income is 90k before taxes/deductions.
my mortgage is $2500.00 a month (a bit more than half months wage).
my property tax is ~5000.00 year
my house insurance is $1200.00 a year
my car insurance is ~$1300.00 a year
my city utilities is about $120.00/month
my car gas is about $400.00/month
my house natural gas is $150/month
my house hydro electric is ~$200/month
that just covers the necessities minus food.
i have friends who live in downtown core vancouver, paying the same as me for 600sqft condo.
that is more than half my gross income, very not affordable. thinking about relocating. can keep same position and just move remote... also had career change opps in dallas, ny, californa, etc at $120k+, better than here... but my whole family is here... my whole life is here.
tough decisions... always thought more money would lead me away, now lack of affordability will instead.
Hope they can read a little of Jane Jacobs: https://en.wikipedia.org/wiki/The_Death_and_Life_of_Great_Am...