College Kids Are Living Like Kings in Vancouver’s Empty Mansions | Hacker News Reader

College Kids Are Living Like Kings in Vancouver’s Empty Mansions

bloomberg.com

106 pointspetethomas87 comments

I saw a similar article like this last month or so.

This is a more realistic article on the subject: https://www.vancouverisawesome.com/2019/03/11/renting-luxury...

Note that I've tried figuring out where to rent these rooms and reaching out but so far have remained fruitless.

Is it just me or has the real estate market become more volatile in recent times? That and the economy over all. I can only imagine how much worse it much be in other nations. America is often less volatile as the world's largest economy, but I know Europe is still stuck with negative interest rates and didn't manage to raise them into positive territory this expansion.

> negative interest rates

Wait, I don't get this. Do I get paid to take out a mortgage?

https://www.investopedia.com/terms/n/negative-interest-rate-...

It's an extreme expansionary policy designed to keep the economy afloat by making people pay money to keep it in banks. Normally this is done by dropping interest rates below inflation; this is the nuclear option for economies. The fact that they are still stuck on this is not a good sign for what may happen to Europe next recession.

This is one of the inherent limitations of a shared currency: Greece needs expansion; Germany needs contraction. Help one; harm the other. It's very difficult to do the kind of things America (or most other nations) can do with Europe for this reason.

He's likely referring to negative real interest rates where inflation is higher than the interest rate.

No, but your bank will charge you to store your money.

Also the bank will get payed, it just doesn't pass the benefits.

In Europe and we took out a mortgage last year.

The rate at which the bank gets money from the central bank is negative, and your local bank adds on 1.5 to that (for a variable) rate from what i remember, so overall the rate was 0.8% I think.

So you don't get paid, but you do get subsidized.

It does seem off.

I live in a US region with essentially no population growth, slow job and wage growth, and a lot of vacant buildings and land.

Since the financial crisis ended, real estate price records are broken every year and see neighborhoods that have double through quadrupled in the past 15 years.

At the same time new apartments have gone up, big property companies have formed and consolidated a lot of multi-unit buildings previously owned by small time owners.

I know interest rates, especially on mortgages, were historically low which caused some inflation. But it honestly baffles me how it could be anything but a bubble.

I think describing this just as volatility somewhat misses the fact that this is the new rules and taxes in Vancouver working as designed. The steep tax on empty properties was explicitly intended to bring down house prices and reduce rents / increase vacancy rates and it seems like it is actually working, although I've also heard it's become more difficult for potential buyers to get their money out of China recently which may also be a contributing factor.

Apologies for being unclear; I'm referring to the broader real-estate market. I can't speak to Canada, but I seem to see this in America (increased volatility) in real estate and the broader economy over all.

It's the sad state of reporting nowadays.

If you read the whole article it's clear that "college students in mansions" is not what the author is really writing about. Even the subtitle makes this clear:

> Globe-trotting landlords can avoid vacancy taxes by renting. It’s the latest twist for a housing market down 8.5% from its peak.

The article really just uses "students renting mansions" as two of several anecdotes accompanying the story. The subject of the article is that Vancouver's taxes on foreign owned investment property are pushing down prices on property, and a rental loophole that is also affecting the rental market.

Headlines have always been set by editors to catch eyes and now clicks. I don't think that makes the reporting any worse.

Perhaps a more appropriate title could have been set on HN but from what I understand the guideline is to use the original title.

I lived in a fraternity for a year when I attended uni. At least a fraternity has funds to go after and pledge labor to clean the place.

A random mix of college-aged kids is one of the worst deals as a land lord because they are guaranteed to be transient. I don't blame anyone who refuses to rent their mansion to them.

When I was a student I had a different viewpoint on this, but it all depends on the people, and putting everyone in one bucket is rarely accurate.

Kids whose parents sign their leases and pay their rents will almost never fail to pay rent, and if you do have a problem, their parents are almost always going to save their asses in fear of breaching contract. At least here in Texas, contracts and tenancy laws greatly favor property owners. As you can imagine, there’s the risk of having people damage walls / floors / plumbing, but in my experience that stuff is mostly trivial to repair and that is what damage and security deposits are partially intended to cover. When I was a student I repaired drywall at every place I lived, some minor, some major, and was never charged a dime at move-out. Most new apartments have a standard procedure of repainting between every tenant.

Good luck repairing the level 5 drywall finish these mansions tend to have.

Renter laws in Canada sound very different than Texas. The tenant acts tend to favor the renter I've the landlord in almost all cases. You can debate if this is good or bad, but being a residential landlord is not the same as commercial property

Being a landlord is a choice. Discrimination based on age is a thing. If you don't like certain types of people, you can choose not to take advantage of people with literal rent-seeking behavior, then stop being a landlord and sell your property.

Age is a protected class. But being a college student is not. I wouldn't rent to a college student/s regardless of their age.

That's kinda like saying "Age is a protected class. But being on a fixed income isn't"...

> then stop being a landlord and sell your property.

Or they could just do what they are doing now, which is completely legal.

You can filter out just about all motley groups of college students by refusing a cosigner. There are plenty of other trivial filters to choose from that succeed in court.

Hackernews needs a bot to correct people every time they incorrectly use the term "rent-seeking". Here's a hint: it has nothing to do with real estate. I see this term misused on a daily basis here.

Rent-seeking doesn't refer to specifically real estate, but renting out a piece of property that you own is rent seeking, as you are using your existing wealth to acquire new wealth without creating any wealth.

When I was renting in Van, 90% of landlords hanged-up immediately after asking how many kids I have. The idea they would lease to a bunch of random doped teens is utterly ridiculous.

[E: that was before EHT]

were you renting in Vancouver before or after the vacant property tax went into effect?

regardless, i suspect most of these "college kids are renting mansions" stories omit the "from their rich parent's friends" part of the story.

I dunno, it seems that these days the accepted way to make money is by nickel and dimeing poor people. How are they supposed to make bank on a family w/ kids that won't constantly owe extra due to delinquent payments? Just a theory, seeing as how the poor and the financially-irresponsible seem to be the best customers of banks and creditors. Might as well be the same for renters.

That is an incredibly low view of people and has not been my experience at all in life or as a renter.

I think most developed NA cities have pretty strict tenant protection laws that, even if failing to actually protect tenants, at least guarantee you'll take some loss from tenants that don't pay and therefore make such activities undesirable. This seemed to be a thing with the slumlords of the past but I bet it's just not profitable enough right now.

Nickel and dimeing poor people and collecting delinquent payments is definitely not something that most landlords want to pursue as a business model. Morality aside, that is a very labor intensive business to be in, and relies on economies of scale to balance out those without the ability to follow through on payments.

I suspect a lot these "lucky students" are from well off families who may well know the landlord personally.

If your a poor "First Nations" student maybe not so much.

On the one hand, it looks like the policy is working and having the desired effect of reducing rent prices and sale prices. But, this is just a short term effect that brings prices closer to their underlying cost.

But, one of the bigger problems we're facing is the underlying cost of building homes. Humanity hasn't made much progress in this regard for the last 100 years: inflation adjust, homes per sq foot still sell for about the same amount. if we're going to make progress on this, we really need to look at those underlying costs and start addressing them. Jumping from one band-aid to another isn't going change things significantly in the long term.

First, 80% of the cost of housing in the Bay Area is location. Second, many houses from 100 years ago didn't have features like electricity and indoor plumbing. Third, we're not going to invent magical 3D printers that make houses out of thin-air.

Already have:

https://www.youtube.com/watch?v=wCzS2FZoB-I

(The workmanship isn't as good as a conventional contractor, but you can't beat the price, and they're being aimed at people who would otherwise be homeless or living in shantytowns.)

Watch a planning meeting sometime. One of the typical community demands is to use onsite union carpenters vs. brining in prefab components from assembly lines elsewhere. Like so many things about Bay Area housing, we actually do have the capabilities, we’re just throwing up legal roadblocks to their use.

Automated house construction certainly seems like a possibility once it costs less than just paying someone to do it.

It's definitely possible to build small rooms with power and a single exterior wall for very cheap. Usually you can rent a storage unit in most cities for ~$30/month.

Personally I'd be happy living in something like that. I spend most of my free time in coffee shops/parks/bars anyway and usually take a shower at the gym. I just want a place sleep and keep a few things.

You can rent a room in a house. It's not $30/month cheap, but it can be cheap enough. Sometimes housemates are not great, but you can usually find a nice quite family to rent from if you are also quiet. It can be a kind of transient lifestyle because usually those rooms are not available permanently, but it's not necessarily bad you you are only thinking about having a place to sleep and storage for a few things.

Highly dependent on the city but just from what I've seen recently around Los Angeles, private rooms in a multiroom unit are around 1k with cheaper units likely being a short term sublease arrangement.

Those are at the very least an order of magnitude more expensive.

Realtors and condo marketers were for years spreading misinformation and downplaying the role that foreign capital was playing in rising land values, in hopes of keeping the good times rolling.

No one can credibly discount those impacts now.

Well they do have stats and the stats say that foreign buyers account for about 3%.

Of buyers or total ownership $ or units?

That was old data that was apparently severely understated.

https://www.theglobeandmail.com/real-estate/vancouver/articl...

I suspect it's only those who are explicitly foreign. Many real estate deals are made through Canada-registered corporations behind which there can be anybody - Canada doesn't track real beneficiaries. The situation has become so dire, that the federal government will spend C$200mln in the next 5 years to fight money laundering in the country, and first of all - in real estate.

BC is going to start tracking this. It was just unveiled last week.

It's more than 3% - but it only takes a small number of price-insensitive buyers to totally upend the real estate market.

There is no underlying price for real estate. If it were corn, the would be the cost of production as a basis. But for real estate, the only way to set price is benchmarking off the sale down the street.

So when a small number of buyers just 'don't care' about price, they effectively establish the price for everyone else.

Foreigner should not be able to buy property in other countries unless they pay major taxes there. Property is only valuable because of the various factors that go into making civil structure: defence, security, legal regime, waters, roads, bridges - even the rest of culture.

'Vancouver real estate' is valuable because of what Vancouver is, made by Vancouverites and Canadians. Only taxpayers and community contributors should be able to own land.

ITT, people who think

- economic free lunches exist

- any capital after their capital came to an area is illegitimate

- markets don't price in risk or volatility

- policy doesn't affect the agent on the margin, decreases costs to his marginal 'neighbors': before a 3% vacancy tax, low consumer surplus buyers could barely afford a house, after the vacancy tax there are some low-consumer-surplus buyers who can no longer afford housing, the two groups who can absorb that depressed purchasing are high-consumer-surplus buyers (read premium buyers) and buyers who had negative consumer surplus who are now low surplus buyers. The majority of that supply gets absorbed by high-consumer-surplus buyers. This is the result of pretty much every economic interventionist policy in so called progressive cities. It's the reason why those cities gentrify: only high-consumer-surplus buyers can survive the policy changes.

Play a game: a casino offers you entry but only returns 97% of your original capital. The only people who can profitably play games in the casino are the most intense and wealthy speculators (in the non pejorative).

Your description of buyers fails to reflect the fact that the high-surplus types are foreign, the rest are local.

There is an easy solution: tax foreign ownership at a significant rate.

This is even justifiable: why do foreign land-owners have the privilege to own land in Canada? We have to maintain laws, secure it, pay for externalized maintenance (the road out front to start), the water, provide the possibility for electricity even if it's not used and all the civic infrastructure.

Non-resident land ownership should be taxed at 3% of the value of the land per year, or banned outright.

There's almost no advantage in a nation selling of it's land as an export.

Another alternative would be only to allow residential 'surplus' to be sold. One trick to implement this might be to allow foreigners to buy flats, but not homes. Not a very perfect trick but it would 'kind of work': it's possible to build a lot of empty buildings in the middle of nowhere as investments. Allowing only a % of homes in an are to be foreign owned would be another opportunity.

>tax foreign ownership at a significant rate

If these "foreigners" should be taxed now, why shouldn't you be taxed also? because at some point in the past you were a "foreigner" relative to where you are now.

>We have to maintain laws, secure it, pay for externalized maintenance (the road out front to start), the water, provide ....

You're describing....property taxes, which still exist. If anything, lower population density reduces demand for those services, so their property taxes should be lower.

Listen if you hate foreigners, think there's an Asian "plague", and get behind the trope that 'foreigners are ruining my neighborhood, country, city' just say it. But before you do, you might do well to read some history such as the Chinese Exclusion Act [1] and it's racist legacy despite being legitimized at the time by "protecting American labor"

[1] https://en.wikipedia.org/wiki/Chinese_Exclusion_Act

This is the 5th or 6th time this story pops up here, and it always features "The Castle".

To me that doesn't even look like a mansion, more like a pastiche, the exterior / materials look very cheap.

As far as I can tell most mansions are being rented out to high income locals, not to groups of college kids.

I toured a few of these in the last couple months and the nice ones had a parade of high income couples going through who would be perfectly happy to rent a $6,000,000 house for $5000 per month.

All the ones I saw explicitly disallowed subletting/group tenancies in the rental agreements.

If you can rent a $6m mansion for $5,000 per month, you're getting a steal. In that case (and especially since this tax policy is pushing prices down further) it makes zero sense to buy.

I'm still not sure I made the right decision turning them down. On the one hand spending $5000 per month on rent feels crazy in Vancouver. On the other hand it is an incredible deal.

In the end what kept me from renting it is the likelihood of needing to move in a year or so. I prefer a bit more stability for my kids.

The nice thing is that they're at least moving those people out of the lower tiers of housing.

If someone can afford $5000 a month for rent, I'd prefer they compete for mansions that would otherwise remain vacant than townhomes which might otherwise go to people who can only afford $2000 a month.

$1000 is still a helluva-lot for a room imo.. Also sharing with 13 other people, sounds like a nightmare.

In Vancouver $1000 gets you a studio basement den. A duplex 1 bedroom is like $1800

From the article:

"nine-bedroom home, dubbed “The Castle” by the 14 students who share the property, is apparently owned by an Afghani pop artist, according to Boodhoo."

A 9 bedroom house - just imagine the size of that. Not a nightmare, but something like Tony Stark lifestyle.

Edit

Oh I misread - a room is $1000. In that case it's not that much of a great deal. At first I thought it was $1000 for the whole building which would put it in "super cheap pricing" territory

At least with your own apartment you don't share the kitchen or bathroom.

for a 9 room, there's probably at least 2 kitchens and 4-6 bathrooms.

From the way the picture looks, it's a whole house.

In Toronto, we have these rooming houses that are teeny tiny 24 people rooming, about 50-100 square foot each, in a space that has 1 shared kitchen and half a bathroom (a washroom with toilet + a separate unconnected closet that serves as a shower, so you can't go potty and take a shower in one space) and they charge $800-1000 per person.

Despite that you know there will always be some conflict.

Personally I disagree. You get some economy of scale the more people you rent with, because at any given time a lot of people will be out and about or in their rooms. So each individual gets to enjoy a lot more of the shared area (except maybe the kitchen; there are probably enough bathrooms and it's not hard to figure out how to share those). I'm thinking about things like patios/yards, living rooms, home theaters, exercise rooms.

Campustowns have lots of big houses like this. It's kind of cool to walk through the neighborhood, they're like stereotypical houses but blown up by 150%

After a few years of being lived in by 19 year olds it will probably lose the tony stark sheen.

Keep in mind that they might only get a room, but it's probably a pretty damn big room. And otherwise nice.

Not sure I'd take that tradeoff at my current age, but considering I lived in a shoebox with a shared bathroom during College for maybe 3/4 the price post-inflation, I'd have taken it in a heartbeat.

1000$ in good areas will get you a nice racoon-sized box.

You also have to share it with two raccoons.

I pay $2400 for a room in SF :(

I have heard stories of groups of furries in Vancouver renting out these mansions and apparently it works really nicely. I guess the key part of sharing a house would be making sure to share with people you get along well with.

It reminds me of Jessie's house in Breaking Bad.

> apparently owned by an Afghani pop artist

Afghani pop artists who own mansions in Vancouver is a really small category.

Thank god, because look at those curtains.. !

Interesting tangent: the correct demonyms are either Afghan or Afghanistani. Afghani is their currency.

God those houses are hideous.

They remind me of the 'McMansion Hell' page - http://mcmansionhell.com/

Now they just need to implement this tax in every city.

>Sun doesn’t think Vancouver’s market is going to come back to its highs, especially at the top end. “Why would they come here and pay all that tax and feel like a criminal?”

Please let this happen in the SF Bay area

Oh Bloomberg you make it sound like everyone is doing it. Not.

Those taxes are obscene.

I doubt it.

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