Vancouver Real Estate 'Bubble' at 30-year Peak

[GenWhy?]

I see the opposite in the market for both condo and rental. As long as you didn't foolishly buy land when it was red hot. Construction costs are coming down a bit. We have Clients buying up "discounted land" for it's now realistically developable at current prices.

[misher]

https://dailyhive.com/vancouver/metr...te-may-21-2019

The suburbs are now beating Vancouver in building rental housing: report

A new rental market update by the Goodman Report (GR) indicates the number of proposed rental housing units in Vancouver actually fell by 36% over the last two years from 3,371 units in 2017 to 2,150 units in 2019.

In contrast, the region’s suburban municipalities have seen their proposed rental units skyrocket during the same timeframe — from 2,618 units in 2017 to 6,999 units in 2019.

[bluefox]

Originally Posted by misher

https://dailyhive.com/vancouver/metr...te-may-21-2019

A couple factors at play here IMO.

First of which is that many projects have been cancelled, postponed or taken offline for redesign (read: scaled down til they don't even resemble the original intent) due to NIMBY opposition. The NIMBY effect is definitely much stronger in CoV and I think that has contributed to the drop in proposed units. Most recent example is the proposal for Broadway and Alma. You would think it'd be a pretty solid project given it's architecturally appealing, includes a good balance of below-market rentals, it's exclusively 100% rental, and it's only 14 floors.

Instead, as implied over in the General Updates thread, we get a vocal group of people saying "I'm all for making housing cheaper BUT", "it doesn't fit the neighbourhood", it's "grotesque" or "horrible", "this is just developers trying to take advantage of the subway" that we apparently "don't need" or the transit hub that doesn't already exist by "inducing demand for rentals", etc. etc. So to me it's no wonder we still face issues given that, if city council isn't taking its foot off the gas like it has historically done on rental-only, these NIMBYs still try to jam their foot on the brake, figuratively speaking. The bar is being set impossibly high because people just won't admit they don't want evil renters living nearby.

The second is that the economics of rental projects dictates that they're going to need to go where it's affordable -- just like homeowners who insist on living the SFH dream will have to move out to the valley. It's always going to be much cheaper to build on empty land with space than it is to raze existing structures, assemble land and then redevelop. And the margins on the rents they would collect in those areas can be higher vis-a-vis construction cost.

[misher]

Originally Posted by bluefox

A couple factors at play here IMO.

First of which is that many projects have been cancelled, postponed or taken offline for redesign (read: scaled down til they don't even resemble the original intent) due to NIMBY opposition. The NIMBY effect is definitely much stronger in CoV and I think that has contributed to the drop in proposed units. Most recent example is the proposal for Broadway and Alma. You would think it'd be a pretty solid project given it's architecturally appealing, includes a good balance of below-market rentals, it's exclusively 100% rental, and it's only 14 floors.

Instead, as implied over in the General Updates thread, we get a vocal group of people saying "I'm all for making housing cheaper BUT", "it doesn't fit the neighbourhood", it's "grotesque" or "horrible", "this is just developers trying to take advantage of the subway" that we apparently "don't need" or the transit hub that doesn't already exist by "inducing demand for rentals", etc. etc. So to me it's no wonder we still face issues given that, if city council isn't taking its foot off the gas like it has historically done on rental-only, these NIMBYs still try to jam their foot on the brake, figuratively speaking. The bar is being set impossibly high because people just won't admit they don't want evil renters living nearby.

The second is that the economics of rental projects dictates that they're going to need to go where it's affordable -- just like homeowners who insist on living the SFH dream will have to move out to the valley. It's always going to be much cheaper to build on empty land with space than it is to raze existing structures, assemble land and then redevelop. And the margins on the rents they would collect in those areas can be higher vis-a-vis construction cost.

Third Vancouver has very complicated policies for encouraging rental. A simple +1FSR is much more appealing.

[Changing City]

Originally Posted by misher

The suburbs are now beating Vancouver in building rental housing: report

A new rental market update by the Goodman Report (GR) indicates the number of proposed rental housing units in Vancouver actually fell by 36% over the last two years from 3,371 units in 2017 to 2,150 units in 2019.

In contrast, the region’s suburban municipalities have seen their proposed rental units skyrocket during the same timeframe — from 2,618 units in 2017 to 6,999 units in 2019.

I'm sorry, but the Goodman Report is not a reliable source of data, except on the prices paid for apartment buildings. They're claiming that there are 2,150 proposed rental units in Vancouver, and 6,999 in the suburbs.

It's not clear what they think 'proposed' consists of, but current rezoning proposals are for 2,392 rental units in the City of Vancouver. There are several thousand more approved - which aren't under construction yet, so those ought to be considered as 'proposed'. And there must be at least 1,000 units with development permit applications yet to be approved.

And there are even more where a rezoning has been approved - like Onni's redevelopment of Pearson Hospital, and Oakridge, and North East False Creek, where each will see several hundred more rental units built as part of the overall project.

It's worth remembering that the Goodmans have an axe to grind - they make their money acting as agents for rental owners wanting to sell apartments. They expressed opposition to Rental 100, and similar programs because it makes the rental buildings less likely to be sold for redevelopment. They issued dire warnings that nobody would ever build rental in the city if rents were controlled, and as we have seen more rental has been built, and is being built, in the City of Vancouver than in several decades.

It's great if there really are nearly 7,000 rental units proposed in other municipalities - it's time for a catch-up. Burnaby actually has fewer rental units than 10 years ago. I wonder if the 3,000 rentals that the Squamish Nation are contemplating are included in that total? Georgraphically they ought to be counted as being in the Vancouver total - although jurisdictionally they aren't. (They can't be called suburban though).

[rofina]

Originally Posted by GenWhy?

I see the opposite in the market for both condo and rental. As long as you didn't foolishly buy land when it was red hot. Construction costs are coming down a bit. We have Clients buying up "discounted land" for it's now realistically developable at current prices.

Interesting - I wonder where the cost savings are coming from on the trade side. I didn't think margins were fat enough to trim a meaningful amount.

Good news about lower land costs creating new opportunities. That's a big positive.

[whatnext]

Originally Posted by Changing City

I'm sorry, but the Goodman Report is not a reliable source of data, except on the prices paid for apartment buildings. They're claiming that there are 2,150 proposed rental units in Vancouver, and 6,999 in the suburbs...

...It's worth remembering that the Goodmans have an axe to grind - they make their money acting as agents for rental owners wanting to sell apartments. They expressed opposition to Rental 100, and similar programs because it makes the rental buildings less likely to be sold for redevelopment. They issued dire warnings that nobody would ever build rental in the city if rents were controlled, and as we have seen more rental has been built, and is being built, in the City of Vancouver than in several decades...

Gee, I wonder why he'd be quoting that?

[whatnext]

Gary Mason accurately calls it on why so many welcome the bubble's bursting:

Why I welcome Vancouver’s housing crash

I’ll never forget the vans.

They began appearing on our street sometime in the summer of 2017. They would stop and disgorge groups of people looking to buy homes in our sleepy little village, Tsawwassen, roughly a half-hour drive from Vancouver. Real estate agents accompanying them would knock on our door, wondering whether we were interested in selling.

Their clients, we were told, were investors from China. They were prepared to pay a premium for homes in our neighbourhood. And buy they did – houses that in many cases were never occupied and, in some, sit empty and silent to this day, grim reminders of a maddening, and in many ways heartbreaking epoch in British Columbia’s history.

It’s difficult to regard the housing correction we are now witnessing without seething. Anyone who was looking could see something wasn’t right with the market a few years ago. Empty homes began popping up everywhere, bought by overseas investors but never lived in. Multimillion-dollar abodes were being purchased by students or homemakers with little income. Condos purchased as presales were flipped and flipped and flipped again before ever being lived in, inflating prices exponentially along the way.

In two years, the price of real estate soared. Yet anyone who drew attention to this phenomenon and pointed to the dangers it represented risked being branded a racist. It wasn’t people from another country buying property who were responsible for the dramatic rise in house prices, it was lack of supply.

That’s what the politicians told us. That’s what developers told us. That’s what the real estate industry told us. It was supply. Build more condo towers and all would be fine. When it was pointed out that much of the new supply started at $1.5-million, which was hardly affordable, the complaint was met with shrugs. The new supply wasn’t meant for locals anyway...(bold mine)

https://www.theglobeandmail.com/opin...elcomed-event/

[misher]

Originally Posted by whatnext

Gary Mason accurately calls it on why so many welcome the bubble's bursting:

Why I welcome Vancouver’s housing crash

I’ll never forget the vans.

They began appearing on our street sometime in the summer of 2017. They would stop and disgorge groups of people looking to buy homes in our sleepy little village, Tsawwassen, roughly a half-hour drive from Vancouver. Real estate agents accompanying them would knock on our door, wondering whether we were interested in selling.

Their clients, we were told, were investors from China. They were prepared to pay a premium for homes in our neighbourhood. And buy they did – houses that in many cases were never occupied and, in some, sit empty and silent to this day, grim reminders of a maddening, and in many ways heartbreaking epoch in British Columbia’s history.

It’s difficult to regard the housing correction we are now witnessing without seething. Anyone who was looking could see something wasn’t right with the market a few years ago. Empty homes began popping up everywhere, bought by overseas investors but never lived in. Multimillion-dollar abodes were being purchased by students or homemakers with little income. Condos purchased as presales were flipped and flipped and flipped again before ever being lived in, inflating prices exponentially along the way.

In two years, the price of real estate soared. Yet anyone who drew attention to this phenomenon and pointed to the dangers it represented risked being branded a racist. It wasn’t people from another country buying property who were responsible for the dramatic rise in house prices, it was lack of supply.

That’s what the politicians told us. That’s what developers told us. That’s what the real estate industry told us. It was supply. Build more condo towers and all would be fine. When it was pointed out that much of the new supply started at $1.5-million, which was hardly affordable, the complaint was met with shrugs. The new supply wasn’t meant for locals anyway...(bold mine)

https://www.theglobeandmail.com/opin...elcomed-event/

I love how people justify dropping home values of locals by saying its only foreigners suffering. In the end a lot of locals own homes in Vancouver and it will be them bearing the brunt of the suffering. Its a minor inconvenience for those who have to keep their money in the bank instead of buying because prices are too high. But its a large loss to those who are losing actual money when prices of their assets drop. Just a decade or two ago people were pushing the government to raise home values because everyone was suffering.

But I understand that most people are self centered and self justifying, refusing to accept or care that others will suffer for their gain.

While I don't agree with them, people who want prices to drop can at least have the decency to wipe that smug smile at others suffering from their faces. Have some decency and respect for those who are suffering for your gain. Many families who have gotten a mortgage recently will now suffer so that you may get their house for a steal once they declare bankruptcy whereas before they could have sold and gotten out.

[s211]

Originally Posted by whatnext

The new supply wasn’t meant for locals anyway

https://www.theglobeandmail.com/opin...elcomed-event/

Which is exactly the response I got from a real estate broker selling a Westbank project, when I queried about some strange (i.e. stupid) unit layouts.

[misher]

https://www.vancourier.com/real-esta...ort-1.23830252

One in five proposed Vancouver housing units has been shelved: report

With new home sales dropping in tandem with resale residential units, Vancouver developers have been rapidly shelving projects, according to a new report by Altus Group.

Of the 5,600 new housing units proposed to the City of Vancouver in 2016, about half have now been approved. However, approximately 20 per cent are in projects that have since been abandoned, said the report.

That’s much higher than in the City of Toronto, where only two per cent of 2016-proposed housing units have been shelved since then.

[Changing City]

Originally Posted by misher

One in five proposed Vancouver housing units has been shelved: report

With new home sales dropping in tandem with resale residential units, Vancouver developers have been rapidly shelving projects, according to a new report by Altus Group.

Of the 5,600 new housing units proposed to the City of Vancouver in 2016, about half have now been approved. However, approximately 20 per cent are in projects that have since been abandoned, said the report.

That’s much higher than in the City of Toronto, where only two per cent of 2016-proposed housing units have been shelved since then.

While the data suggests just over 1,000 units in the City of Vancouver not proceeding, around 20%, and only 2% not proceeding in Toronto, it also shows that almost nothing proposed in Toronto in 2016 has actually been approved - over half is under appeal, and the rest hasn't been approved yet - so it's too soon to know if they'll really get built there, or not.

It's a shame we don't know which projects that were submitted for a Development Permit in 2016 in Vancouver have now been 'abandoned' - there's been speculation about some projects, but I don't think anyone has identified projects that would add up to over 1,000 units.

[GenWhy?]

Originally Posted by misher

https://www.vancourier.com/real-esta...ort-1.23830252

Article has more good news than the click-bait title. I like how "housing" refers to non-rental ("new homes sales"). Then they show charts that are for general Dev. Permits for housing. I just wish the writing in all media and conversations was more concise to help the dialogue.

[whatnext]

Originally Posted by Changing City

While the data suggests just over 1,000 units in the City of Vancouver not proceeding, around 20%, and only 2% not proceeding in Toronto, it also shows that almost nothing proposed in Toronto in 2016 has actually been approved - over half is under appeal, and the rest hasn't been approved yet - so it's too soon to know if they'll really get built there, or not.

It's a shame we don't know which projects that were submitted for a Development Permit in 2016 in Vancouver have now been 'abandoned' - there's been speculation about some projects, but I don't think anyone has identified projects that would add up to over 1,000 units.

Yes, it would be interesting to know which developers were walking away. I assume one of them is Vivagrand's Langara project?

[Galaxy]

It is a shame also that their cancellation means a waste of time of all the work that has already been done but also the fact that even if some of these projects started today there would be no guarantee that the units would be ready for move in for another 2-4 years depending on availability of trades and all. Just look at 8X it's been more than a decade since that project started planning and it's not even above grade yet. Lol!

[Changing City]

Originally Posted by Galaxy

It is a shame also that their cancellation means a waste of time of all the work that has already been done but also the fact that even if some of these projects started today there would be no guarantee that the units would be ready for move in for another 2-4 years depending on availability of trades and all. Just look at 8X it's been more than a decade since that project started planning and it's not even above grade yet. Lol!

That example is pretty much the most complicated you could choose, and it isn't ten years yet. Brenhill approached the city in 2011, submitted the rezoning in 2013, then redesigned the tower and submitted a revised tower, and then had to wait while the local resident's group tried to get the courts to stop the project. They then had to build the replacement social housing before they could clear the site.

Didn't a different developer start building that 4-storey building on Main Street at E 11th at around the same time?

[whatnext]

Wall must have managed to unload a couple units in Shannon Wall Centre, as their sign now says "Only 5" units available, as opposed to the "Only 8" that was up there for months. Quiet remarkable, given that there are a shitload of units available for resale in the development.

[Galaxy]

Originally Posted by Changing City

That example is pretty much the most complicated you could choose, and it isn't ten years yet. Brenhill approached the city in 2011, submitted the rezoning in 2013, then redesigned the tower and submitted a revised tower, and then had to wait while the local resident's group tried to get the courts to stop the project. They then had to build the replacement social housing before they could clear the site.

Didn't a different developer start building that 4-storey building on Main Street at E 11th at around the same time?

Although you also have the fact that pretty much almost every project nowadays in Vancouver is hitting issues and are in areas that are not easy to redevelop so really I think 8X is less of the exception and just more of the new norm. Vancouver, for the most part, has run out of the open former industrial lands that we use to have that a builder could redevelop with minimal opposition to an environment that almost every project will encounter some level of opposition. The multiple levels of new red tape added even in the last decade also is adding to cost and time that all contribute to an added cost to have these project approved and eventually completed.

It all adds up to why some developers choose to go to the suburbs to build their projects. More projects need to be built and not be shelved and or cancelled just because the immediate market may not make them viable is what I am saying.

[misher]

Originally Posted by Galaxy

Although you also have the fact that pretty much almost every project nowadays in Vancouver is hitting issues and are in areas that are not easy to redevelop so really I think 8X is less of the exception and just more of the new norm. Vancouver, for the most part, has run out of the open former industrial lands that we use to have that a builder could redevelop with minimal opposition to an environment that almost every project will encounter some level of opposition. The multiple levels of new red tape added even in the last decade also is adding to cost and time that all contribute to an added cost to have these project approved and eventually completed.

It all adds up to why some developers choose to go to the suburbs to build their projects. More projects need to be built and not be shelved and or cancelled just because the immediate market may not make them viable is what I am saying.

People are being deliberately obstinate in insisting we fight development and developers yes those same people complain about home prices. I feel like we’re just quickly rushing towards another housing crisis and all these demand side measures are just like putting rocks on the lid of a boiling pot, making the eventual explosion once the lid blows off all the bigger.

[nds88]

Originally Posted by Galaxy

The multiple levels of new red tape added even in the last decade also is adding to cost and time that all contribute to an added cost to have these project approved and eventually completed.

Seems like Vancouver's decision makers want to increase costs for developers, but also want the price to go down or at least not go up Can't have it both ways.

Originally Posted by Galaxy

More projects need to be built and not be shelved and or cancelled just because the immediate market may not make them viable is what I am saying.

No one is in the business to lose money. Who will put up the capital if there is too much risk a return won't be realized??