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Comment by tallanvor | Hacker News Reader

I see this as a problem all over the world. - San Francisco, Seattle, New York, Vancouver, London, Oslo... Really the list could go on for quite a while.

So many of these cities feel like they have to retain their "identity" or the "feel" of the town, so they set restrictions that make it very hard to develop properties that can hold more people. The result is always the same: continually increasing prices in the center of the city whether you want to rent or buy, so you have to go further and further out to find something affordable, especially if you are young or if your parents can't help you finance a purchase.

This is going to continue until planning commissions start allowing the construction of higher density housing.

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I'm not sure if a fix would be so easy. Housing prices have been rising everywhere, even in small cities like my home town, where a decent amount of construction is going on.

I think that the biggest reason for growing housing prices are the currently low interest rates.

There are two factors that cause rising prices (due to low interest rates):

1) It's more affordable than ever to borrow money, so people are willing to pay higher prices, and even people with little savings can afford to buy a home. At 8% interest rates nobody would be able to afford current prices. This means that sellers can ask much higher prices.

2) Since interest rates are so low, people are increasingly looking at the housing market as an investment opportunity. Aspiring homeowners now have to compete with deep-pocketed investors leading to a further increase in prices.

So I think that housing prices would naturally fall if interest rates went up. (Of course, for young people without savings this makes little difference; they would likely end up paying just as much due to higher financing costs.)

> I'm not sure if a fix would be so easy. Housing prices have been rising everywhere, even in small cities like my home town, where a decent amount of construction is going on.

Yeah, this doesn't get enough attention. Everyone's so focused on NYC / Boston / San Francisco / Seattle / Denver, that they're missing that this problem is happening almost universally, in the vast majority of markets across the US.

I live in a very small city in flyover Midwest that commonly hits the top ten "affordable places to live" lists, and has the lowest average incomes of any market in the entire US. Despite all of that, even here our costs have skyrocketed. Monthly rents have doubled over the past five years.

It's feels like another housing bubble, but this time everyone is refusing to let it pop.

This is true, but this should have less effect on rents which the article notes are high in Vancouver.

So I think that housing prices would naturally fall if interest rates went up.

The problem is that falling house prices put people "underwater", and rising interest rates put people on variable rate mortgages in arrears. This inflicts a huge amount of pain on middle class floating voters.

Yes, I think this is a huge problem -- if interest rates rise again, a lot of people will suffer. Therefore policy makers have a big incentive to keep interest rates low.

I don't know how this will end, but I don't think that the current low interest situation, which incentivises credit and discourages saving, can be stable in the long run.

incentivises credit and discourages saving

Both of those things encourage economic growth, though. Until we come up with some better way of meeting our demand-side needs, rates are going to stay low.

Well that's the downside of variable rate, yes, but that's more of a feature than a bug.

Locking in the interest rate costs a little bit more (in the form of a higher fixed rate), so perhaps the folks taking the variable rate weren't financially prepared to handle those terms in any case?

Doesn't matter. The end result would still be that middle class voters would feel the pain, and would likely try to vote people out because of it.

I think one way to soften the blow could be to make all property sales, even your first home that you live in full-time, fully capital-gains taxable. Homes need to be seen less as investment vehicles.

No, not your primary home. The last thing we want is a bunch of old ladies being hit with a huge tax bill on the home they've lived in for 40 years.

Not sure if you're being sarcastic, but the whole point of making the changes to the capital gains taxes is so that it only affects people who sell. The old ladies will simply be earning less profit when they _sell_ their homes, there would be no "huge tax bill" while they are still living in them.

It's telling that Toronto isn't on that list. It's taken me a decade of living here to really understand what makes this place tick, and one thing that's become clear is that a near universal friendliness to newcomers in both word and deed is a huge part of Toronto's identity. I've said it before in many conversations on the topic, but I think that this pervasive openness is going to do nothing but help Toronto's place on the world stage

I suspect Toronto's the most multicultural, international city on earth, and it's high on my list of places I'd live if I wasn't married to someone with zero tolerance for snow.

Unfortunately, Toronto still manages to suffer from a god-awful housing market made worse by insane NIMBYism in the most affluent and attractive neighborhoods. I think "I got mine, time to dig a moat around it" is a pretty universal phenomenon.

The snow really isn't a factor at all anymore. If you live right (near the subway & in a neighbourhood where you can get everything you may need in a pinch locally) you don't even notice it. I can probably count on one hand the number of days that I've been impacted by snow in the past few years.

In terms of NIMBYism, I don't think there's much more here than in similar cities. To my eye it's more about people being indifferent to the effects of gentrification on marginal populations, and a growing danger of homogeneity in many 'hoods.

Agreed. It would be nice to see Toronto build more of it's identity around this inclusiveness and openness. Surely the fact that Toronto is now the most diverse city in the world is worth trumpeting a little bit.

There was an article a couple of months ago, shared all around urbanist social media, lamenting that rental prices in Seattle were declining because of an increased supply of housing (it was in one of those ubiquitous business insider journal type magazines). For a variety of reasons, it can be hard to increase supply, but that's the best way (barring a recession) to lower the cost of housing.

And it's not even that, rental prices in Seattle haven't declined, just the percent growth rate in rents year-over-year is declining.

Which makes it even more ridiculous to see them lamenting it. They seem to feel like they deserve double-digit rental growth rates every single year, and "falling" to a single-digit growth rate just won't cut it.

Vancouver has various restrictions just like any town, but in general it would be incorrect to state that they restrict construction or don't build high density buildings. Comparing a photo of 1990s downtown Vancouver to now it is shocking how many glassy residential towers there are now. Vancouver and its satellite cities are constantly building new condo buildings.

I suppose you can always argue that a city can build more, but I've seen more construction cranes in Vancouver than just about any city I've ever visited.

I think more dominant issues that have influenced the price of Vancouver housing is low interest rates, lax lending rules, government policies that promote home ownership and speculation, and the influx of foreign capital.

Actually, we do restrict construction particularly in the "view corridor" that is downtown. It's not that we don't build buildings, it's that they are all under 40 stories, whereas a typical city of our size would have buildings of the same type pushing 100 stories easy.

For a sense of scale, here is Vancouver's tallest building compared to the world leaders: http://i.imgur.com/YcCozCE.png?1

Right of course but my point is that view cones and other restrictions on the form of housing are not a dominant factor when you compare how much housing supply they would bring versus the level of housing being created elsewhere.

Vancouver is upzoning the entire corridor along Cambie street and is planning on building significant residential parcels at Oakridge (~2000 units) and Pearson Dogwoods (~3000 units). If you go out further to Burnaby, New Westminster and Coquitlam they're building tons. Burnaby just announced their long term plan for a redevelopment of Lougheed Mall that will create 11,000 units.

Basically adding further height downtown isn't really necessary and the gains are minor in comparison with the gains achieved by rezoning low density single family houses and low density commercial to higher density forms.

Locally the people who own the land (and small houses on top) often obstruct that very planning process for higher density housing.

> This is going to continue until planning commissions start allowing the construction of higher density housing.

Or we have more remote jobs, and/or satellite offices. For example in the UK why have your developers in London? Open an office in Newcastle or Glasgow, you're just a few hours away by train (an hour on the plane) and you'll save a fortune on salaries and office space (and probably a tax break or two). Or use remote workers where it makes sense.

> Or we have more remote jobs, and/or satellite offices.

So much this. Especially for the "tech industry". A good portion of Vancouver's startups and tech companies are "downtown". Why not move out of the core? Why not add a satellite office somewhere affordable? Why not start to offer remote work options?

This is not an industry where you need to be physically present to get the job done, for the most part, yet the tech companies here(and elsewhere) aren't/don't seem to be looking at work options other than the status quo.

>This is going to continue until planning commissions start allowing the construction of higher density housing.

This is already happening here in New York City and has been for a few years. It's not solving the problem and honestly this seems like pretty a reductive way of stating the problem.

New York City construction rates are extremely low. It only seems high because high density means you're always close to development, just like you always hear ambulance sirens even though heart attacks aren't more common.

Many Manhattan neighborhoods are classified as historic and don't easily allow tearing down old buildings for new ones. Many buildings in other Manhattan neighborhoods are landmarked and can't easily be improved. And though he upzoned some areas of the city, Bloomberg also downzoned large swaths of outer borough neighborhoods, preventing cheap multi-family home construction (to replace single-family homes). The outer boroughs also suffer from onerous parking minimums, limiting the amount of land used for housing.

De Blasio has been slow in pushing for any sort of upzoning. He's only recently made his first attempt with the relatively conservative East New York rezoning.

Some data: http://newyorkyimby.com/2014/08/new-york-citys-is-americas-s...

The key is that when construction is allowed to lag behind needs, prices will rice much more quickly than they otherwise might. But sure, I agree that there will always be multiple factors at play.

That is, frankly, a very small part of the problem. The housing that does tend to get built in these cities is almost universally luxury housing.

Yes, and that won't change until we have something like a land value tax that is based on active use of the land. There needs to be a mechanism in place to stop wealthy investors buying up property they barely use. At the moment luxury property in a large city is seen as a safe investment (for the most part).

Yeah, it's incredible to me that legislators can just throw their hands up and pretend there is absolutely nothing they could possibly do.

It's sad, but with the level of corruption in many governments, the only way to get change that serves the people is to educate the people so that they can see through their misinformation. Once the population is highly informed about the issues, they can't pull their usual tricks without a high risk of losing their job.

I realise that the general population should have an active role to play in all democracies, but sometimes you'd wish they'd just do the right thing without needing to be micromanaged through it.

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