Apartments vs. Micro condos in the west end.
With the current condo construction boom displacing rental stock some people are getting very frustrated with the state of housing in this city. Despite statistics of declining population growth and record levels of condo construction the rental market appears to be tight right now. I received this letter of frustration from Colleen last week, which with her permission I reprint here:
As a long time renter in the city I am very concerned about the possible changes to the moratorium on condo development at the expense of existing rental units downtown. The affordability of buying a condo is out of reach for most people in Vancouver. The rental costs for many of the condo’s recently built is extreme, given the ridiculous size of new apartments. Less than 550 square feet for two people isn’t living, no matter how small your murphy bed is. Accommodating desired population density in the city is not a justifiable issue-considering that the West End is all ready one of the {if not THE}most densely populated neighbourhoods in North America.The developers who are concerned about accommodating population density do not live downtown in a 450 sq ft apartment. Nor are they likely to have an average combined family income of less than $80,000 annually.
Many of the owners of these new micro condos have 30 year mortages. Do you really think that these young, new owners are going to stay in their units longer than 5 years? Where will they go? After all, moving “out and up” to the suburbs in BC is not in the same league as moving from TO to Oakville, Burlington, Mississauga, Pt Credit, Guelph, Aurora, Kitchener, Paris, Ancaster, Waterloo, Waterdown, Dundas, Do I really need to go on??…….people require change to reflect their growth and development and their need for change and growth doesn’t change. Mountains or no mountains. Lets compare Ancaster, Ontario to Langley, BC..PLEASE!!One bedroom rental units are averaging rents over $1000./mth with restrictions on storage, balcony use, pets, smoking, decorating , barbequing, feeding birds, children and subletting.
There seems to be two types of people in this city:
Those who invest and develop at a large scale and those who are forced to pay them at an alarming rate.This is a case of the ridiculously rich and the rest of us. Why are we not considering the quality of life in Vancouver for its citizens as well as its development? Where are our elected, well paid politicians? We do not live in London, New York, Tokyo or Hong Kong. This is not Europe. We are Canadians-with our own histories, roots and expectations about how we live. This is what makes Vancouver such a beautiful and special place.
Sincerely,
Colleen
June 1st, 2007 at 10:13 am
Clarke,If thinking that the people who work in a city should be able to afford reasonable accomodation in a city gives me "an entitlement" mentality, so be it.Who do you propose should subsidize your entitlement?Let's say you can afford $600/mo for rent and your idea of "reasonable accomodation" is $900/mo. Who pays the $300 different… government? landlord? Or let's say you feel entitled to not only live in "reasonable accomodation," but OWN it. Who should pick up the difference between the $600/mo mortgage payment you can afford and the $900/mo payment necessary to service the purchase loan?
June 1st, 2007 at 6:35 am
"Prices? yes they are out of whack because prices in the lower mainland are ridiculously high. Hamilton's prices are not. You are not paying for mountain views in Langley (although they are nice)."We can speculate about what prices ought to be based on comparative criteria x,y, and z. In the end, it is set by supply and demand. As always, the problem with RE demand is that it contains more than just demand for housing. If it didn't, rents would follow. It contains expectations about the future so greed and fear have an impact.TOdays prices may seem stupid, but they are what they are. There are negative externalities imposed upon those non-owners who want to live here. Nothing they can do about it unfortunately, except rail against it.In the longer run, it is impossible for a city to price itself out of the market. That is just a function of an imperfect market based on unrealistic expectations. Having said that, we are growing, though not as fast as we used to. Real prices will continue to rise over time, and the vast majority WILL be priced out of SFH in Vancouver proper. They will have to go to townhome or move further out. And that is just the way it is. Remember, 100 years ago, the West End was all SFH. I don't know exactly what went down, but I wouldn't doubt that some West End resident lamented the affordability situation.
June 1st, 2007 at 12:27 am
Another thing a can't figure out is what she means by:Lets compare Ancaster, Ontario to Langley, BC..PLEASE!!Prices? yes they are out of whack because prices in the lower mainland are ridiculously high. Hamilton's prices are not. You are not paying for mountain views in Langley (although they are nice). You are paying for proximity to Vancouver, the P. Ocean, the C. Mountains etc. Things that apparently cause prices to rise uncontrollably along with the Olympics. But only since 2001. I guess no one noticed the mountains before then.
June 1st, 2007 at 12:24 am
I think that it is wrong to assume that family housing is going to be built or planned into the downtown core of Vancouver. Do other cities have nice family housing right in their downtown core that is affordable for an average family? Did Vancouver ever have family housing in the downtown core (3-4 bedroom large apartments)? I think there are a few, but pricey. In the seventies and eighties I don't think the west end was planned for families. The burbs were affordable – I know many people who grew up in Richmond and Burnaby who can now no longer afford their neighbourhoods. This is what makes me think there is a huge problem, not overpriced townhomes in Yaletown.Yes, I know it is trendy and maybe even eco-friendly to live downtown, but it seems that most people who think no farther then the downtown aren't from the GVRD originally. Those are who are from the GVRD are willing to live in other neighbourhoods (which are equally unaffordable, but larger). If you want to raise a family in Vancouver, ask the average Lower Mainlander where they grew up. Most will say North Van, Burnaby or Richmond. A few will say the Eastside or Westside of Vancouver, and I only know one person who grew up in the west end. He moved out of there as soon as he left home.
May 31st, 2007 at 10:40 pm
If thinking that the people who work in a city should be able to afford reasonable accomodation in a city gives me "an entitlement" mentality, so be it.
May 31st, 2007 at 10:21 pm
Being wrong for two years doesn't demonstrate a valid argument, it demonstrates a wrong argument.So someone who called the dot.com a bubble in '97 would be wrong in '99? We all know how that turned out.
May 31st, 2007 at 8:34 pm
"Being wrong for two years doesn't demonstrate a valid argument, it demonstrates a wrong argument. "The argument was that prices were out of line with fundamentals. That argument is indeed even stronger today. Affordability is worse. Price/rent multiple is higher.The argument was not that prices would fall imminently. It was that the market would return to fundamentals. In that sense, the market's stubborness does not make it a "wrong argument"."When reality mismatches your model, it's wise to pay attention to the existence proof… "Reality? Are you suggesting that the fundamentals modeled by VHB were not real? Au contraire, the inputs to the model are just fine. The outputs haven't been to date. That is a very temporary mismatch, unless you are going to go down the "paradigm shift" road.
May 31st, 2007 at 8:07 pm
…that claim is even stronger today than 2 years ago…Being wrong for two years doesn't demonstrate a valid argument, it demonstrates a wrong argument. When reality mismatches your model, it's wise to pay attention to the existence proof…
May 31st, 2007 at 8:04 pm
So the West End VS Manhattan debate rages on.It doesn't "rage" at all. Comparing an area of 23 sq. miles that includes Central Park(!) to 1 sq. mile of carefully-chosen Vancouver is self-serving curve fitting of the finest order. Taking Manhattan neighborhoods of the same size as the West End delivers at least a dozen neighborhoods where density is more than 5 times that of the West End. The peak is probably 10x – a full order of magnitude. And that's just Manhattan – same is found in Queens and the Bronx. Rinse, lather and repeat for a handful of other US cities.
May 31st, 2007 at 4:14 pm
Tulip: you know the drill.Non illigitamus carborundum.And I agree with what you say – the bust is coming, don't know when, but it's in the mail.Tick Tock, for sure.
May 31st, 2007 at 3:16 pm
Right on Exvan:"There's a whole world of fugly going on here. This attitude, sadly, represents the 'spirit' of Vancouver."I don't know how to say as nicely as you so I said it a nasty way:"I am somewhat disturbed by the expressed opinions of some of the lesser minds on this blog who seem to think their syllogisms are worth of some praise as if they were propped by some truly solid and irrefutable economic law."And thanks for the words of encouragement, I won't let the Bastards grind me down.
May 31st, 2007 at 2:26 pm
"Some agents still have their honour."drachen: that is kind of rare bird for a realtor. Usually they'd just ride the hype and go for another commission.Good to hear.
May 31st, 2007 at 2:21 pm
"The sense i'm getting from a lot of people is they confuse their right to have a family with some feeling of entitlement to raise their family in some expensive living space in a highly desirable area on a small budget."There's a whole world of fugly going on here. This attitude, sadly, represents the 'spirit' of Vancouver.
May 31st, 2007 at 1:59 pm
"For a while now I've been convinced that satv is freako after he's smoked too much pot.
"It would take a lot more than pot for that to happen.
May 31st, 2007 at 1:58 pm
"For a while now I've been convinced that satv is freako after he's smoked too much pot.
"Personally, I don't care what satv is, or what it will ever be.It's worthy of scrolling past. Nothing to see there.
May 31st, 2007 at 1:36 pm
For a while now I've been convinced that satv is freako after he's smoked too much pot.
May 31st, 2007 at 12:05 pm
I have a friend who sold recently, her husband was determined to use the money for flipping so she turned to her selling RE agent and asked him to straighten her hubby out. Turns out the guy said what most people here would say, buying now is foolish.Some agents still have their honour.
May 31st, 2007 at 9:00 am
Chipman's a realtor, isn't he? so we shouldn't expect him to be any better than he is. I wouldn't expect a whore to tell me she has the clap.
May 31st, 2007 at 7:22 am
JUNE SALES ARE UPJUNE PRICES ARE UPSatv, are you a fortune teller or just a shill?
May 31st, 2007 at 5:40 am
SATV: You smarts guy,sometime sound like Rob Chipman without talk good english.Sometime me thinked you Rob.But sometime I think not and maybe yes for sure some others time.One thing for certain, you smart like he.
May 30th, 2007 at 10:39 pm
he has been wrong. He was insightful, he had great data, and he had great arguments. While he blogged about how unsustainable this market is (influencing many to play it safe, no doubt)I am totaly agree with chipman.and same words I through on VHB on his last post.that posting of vhb title "who is next"I answer to vhb "sir you are next"and he packed his suite case since then.if no body beleive me you can go back to this title called "who is next"he was wasting his time and he also hold lots of bullish back from being buyers those same b's are having hard time understanding true effects.JUNE SALES ARE UPJUNE PRICES ARE UP
May 30th, 2007 at 10:36 pm
To date (and I say this with much respect) he has been wrongWrong about what? VHB never called a market top. His claim was that RE prices were unjustified by fundamentals, and that claim is even stronger today than 2 years ago. And history tells us that prices unsupported by fundamentals always correct eventually.Oh and Rob, if a lot of people lose their shirts in RE over the next few years, are you going to blame yourself? I'm waiting for it.
May 30th, 2007 at 8:11 pm
I took a gander at Chipman's. Not much has changed. Here is the latest swipe at VHB:VHB’s blog was great, but deep and relevant it wasn’t, at least not if you’re interested in making money in real estate. To date (and I say this with much respect) he has been wrong. He was insightful, he had great data, and he had great arguments. While he blogged about how unsustainable this market is (influencing many to play it safe, no doubt) many people made a lot of money in real estate. I don’t think anyone can seriously disagree with that statement (but I’m sure someone will). Yeah, if you want to make money in RE, you need to listen to a guy whose sophistication is limited to "markets always change".
May 30th, 2007 at 7:49 pm
Re the above post: Vancouver, Canada's third world class city.See you in Ottawa. I'll be sitting in the living room of my SFH and watching the snow come down.
May 30th, 2007 at 7:11 pm
"Pardon me for being dense, but are you serious? Are we talking "family" as in two adults, one or more kids (or pet)? In a two bedroom apartment? The shoebox kind?"By family, I do mean two adults with children in EACH family. It sound absurd, but if people insist on living in Vancouver, that's what they do. I've known a family sharing a three bedroom basement with another family and a single person. Granted, that was temporary arrangement, while they look for a self-contained basement suite. They later moved into a two bedroom no living room (i.e. small kitchen) ground floor place.Not to such an extreme, but the Univercity development on SFU campus features condos that have self-contained mortgage helpers. It's designed for "young, professional families starting out".
May 30th, 2007 at 4:08 pm
"But no one heard them callin', no one came at all'Cause they were too busy watchin' those old raindrops fallAs a storm was blowin' out on the peaceful seaSeventy-three men sailed off into history"
May 30th, 2007 at 3:17 pm
Clarke,If you have any sort of family, what are your odds of finding anyplaces in any of the current condo developments-Every new construction presentation I've been to has included a variety of 2-bedroom units in the mix. In fact, by the time I went to the spectrum pre-sale there was ONLY 2-bedrooms left.If a person is happy to live in a closet or a shed or a 1-bedroom apartment, what makes you so qualified to tell people they're living their life wrong? Heaven forbid people not share your perfect tastes.The sense i'm getting from a lot of people is they confuse their right to have a family with some feeling of entitlement to raise their family in some expensive living space in a highly desirable area on a small budget.
May 30th, 2007 at 3:01 pm
"…buy it and rent out the second bedroom to another family"Pardon me for being dense, but are you serious? Are we talking "family" as in two adults, one or more kids (or pet)? In a two bedroom apartment? The shoebox kind?I don't know… that sounds even more insane than the vancouver real estate market…that apartment better come with two bathrooms…
May 30th, 2007 at 2:18 pm
"Developers are building teeny weeny condos because they make money that way. "Well, if the profit is not as large, developers will be less inclined to jump through the hoops of buying land,rezoning, pulling permit, and recruiting construction workers outside BC. The net result is less square footage being built, or more people on the street. (That's just sarcasm. More likely more people leaving GVRD due to high cost of living.
May 30th, 2007 at 1:55 pm
About my strawmanWithout some kind of guide as to what areour Cultural expectation I picked a clichedlocal real-estate class, I could have said a Vancouver special just off of Kingsway."We are Canadians-with our own histories,roots and expectations about how we live"I still have no idea what this actually meansand what the expectations of the authorare that we share as being Canadian andif they are different from humans in anyother modern democratic society.
May 30th, 2007 at 1:46 pm
I don't think they'll become slums, but once the market adjusts back to the point where people can afford decent housing, I'd expect the sub-600sqft market to be primarily populated by single people and childless couples in their late 20s and early 30s.600sqft is only too small if you're thinking about raising a family, and the only reason people are thinking about that is because they can't afford anything "family sized" within an hour of downtown. If they were priced around $150,000, a single person could afford it and it would be a viable alternative to renting (or an investor could buy and rent it out). As others have said, the issue isn't that no decent sized housing is being built, it's that normal people cannot afford to buy anything in this market. That's the primary effect of the bubble. Once the bubble pops, a dual-income family earning decent money should be able to afford something big enough to raise a family.