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The City wants to drive down the price of your condo

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Got an investment condo or two? It might be a good time to sell because the City of Vancouver has just unveiled it’s plan to drive down property prices and rents.

In a plan that goes before council today, the city proposes to provide $42 million in land and capital grants over 10 years to create 38,000 new affordable homes, including 7,900 supportive and social-housing units, 11,000 market rental units and 20,000 new condo and “ownership” units by 2021.

Coun. Raymond Louie said in an interview that strategies may include:

• A “rent bank” where tenants facing eviction for not paying their rent can apply for either a loan or a grant, which is then paid directly to the landlord.

• Long-term leases, where the city maintains ownership of the land, which is leased at preferred rates for a defined term but is always owned by the city.

• Units that have fixed limits on the profits that homeowners can make when selling, which would end property speculation; any rise in property value beyond the set limit could be directed to the city for other social-housing projects.

• Limits to the profits that developers can make on the land speculation in projects; special consideration for a project’s approval may be based on the developer making a lower profit.

• Increasing co-op ownership and rentals, where a financial institution or the government makes the initial outlay of cash and is repaid over a long period of time.

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patriotz
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patriotz
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The City does not own enough land to make a significant impact on market rents or sales prices by releasing it for development.

The City can take measures to capture speculative gains going forward on land it makes available for development. The problem is that since IMHO we are at a market top these measures are moot.

Either the provincial or federal governments could collapse the bubble immediately by capturing speculative gains on all properties based on cost base (since that would drive speculators out of the market) but the City lacks this power.

But at least the City is willing to admit that there is a problem and is willing to propose doing something about it, unlike Premier Mom or her putative successor.

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6 years 10 months ago
Anonymous
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So does the rent bank mean that you no longer have to be careful who you rent to? If you lease your place out to a junkie can you apply to the rent bank if they disappear?

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6 years 10 months ago
Chris
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These are plans and remain plans forever. Why? because City Hall is cash short. If City Hall has kidneys it will sell one in a heart beat.

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6 years 10 months ago
Patiently Waiting
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@Anonymous: The tenant applies not the landlord. Landlord's may not want this because it puts them on the City radar if the suite isn't registered and not up to standards.

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6 years 10 months ago
gokou3
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Let's see… $42mil/38000 = $1105/unit. Does each unit require so little subsidiary? Did I read it wrong that the figure should be $42M per year over 10 years?

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6 years 10 months ago
Devore
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@Anonymous: No, actually this sounds terrible for landlords, who now will have their non-paying tenants lingering around even longer while their case works its way through the system.

I've been following Rachelle's Landlord Rescue blog, and in Ontario the worst tenants are those who are on rental assistance.

The government gravy train may seem appealing, but it:

a) is not, and

b) comes with strings attached

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6 years 10 months ago
patriotz
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@Devore:

The City cannot trump provincial residential tenancy legislation. The only way the City can keep non-paying tenants in their dwellings is to pay the landlord up front. Initiating a process isn't good enough.

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6 years 10 months ago
bubba
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Has anything Vision touched ever worked out ?

Vision….bend over taxpayers…and leave the driving to us.

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6 years 10 months ago
paradox
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13 degrees out there.

End of July.

Feels so warm and cosy out there.

I am out hitting for the beach in the best place on earth.

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6 years 10 months ago
Krazy Kanuk
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Unfortunately I can't see how the city can really affect prices.

The only thing I could support is loosening zoning rules, and letting people build things like those 250 sqft apartments or permitting the building of more suites, basically allowing for more density (and cheaper options).

I would think though, that 80% of this problem will solve itself. Like Patriotz is saying, I think we are near the top of this bubble. When it bursts, rents may actually fall (like they did in the US if I remember correctly).

KK

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6 years 10 months ago
Zhao Ziyang
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I foresee unforeseen consequences.

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6 years 10 months ago
bubba
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What happened to Boobie Rennie?

Is he in Williams Lake ?

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6 years 10 months ago
bubba
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Actually…..

The Vision retards are setting up a template that may be on par with the MURB program did….in early 1980's.

They will simply create OV II …another disaster.

Vision will have all sort of whacko Green initiatives…further complicate the design…and future costs. Remember, the OV has several different meters per utility, and that contract is owned by a company indirectly connected to Joel Solomon, Mayors puppetmaster.

Let the market be….one can almost be guaranteed lots of rental will appear….this is the last thing Vision should do…unless it is trying the false flag the issue to make everyone think the market is still booming, hence the "need".

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6 years 10 months ago
Madashell
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@bubba: In Shanghai setting his office across the street from Cam the no-Good courting the HAMS.

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6 years 10 months ago
Troll
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Yawn.

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6 years 10 months ago
Troll
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http://www.financialpost.com/personal-finance/Rec… RBC Asset Management weighs in on Canada's debt situation and impact on housing market. Further, he adds: “There is a popular misconception that the Bank of Canada cannot afford to raise interest rates because this would prove too damaging for mortgage holders. The opposite is in fact true. The reality is that the Bank of Canada cannot afford to delay raising interest rates, for precisely the same reason. The longer the bank delays, the more marginal borrowers will enter the market and be walloped when rates rise, and the further home prices will go above their equilibrium levels, only to tumble later.” Once the Bank of Canada raises its key lending rate from the current “astonishingly cheap” one per cent, rising costs of servicing mortgage and other debts will sap consumer spending. Housing prices will fall as lower-tier buyers… Read more »
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6 years 10 months ago
900kCrackHouse
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@patriotz: How do you know we are at market peak?

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6 years 10 months ago
Patiently Waiting
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@patriotz: So the "rent bank" will save COV money by dealing with homelessness at its source. Once homeless, people become a huge burden to the social safety net.

Now the burden will born by landlords. Do they have any kind of effective lobby group that will speak out against this? And do people care what "slumlords" have to say?

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6 years 10 months ago
Girlbear
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Got an advert in the mail today for latest phase of Ravenswood development in North Van. Condos are to be completed by summer 2012 and start at $299k. So I checked MLS. Currently there are 37 condos listed for sale in Ravenswood! (earlier phases) – asking prices starting at $269k. Why would I pay > 10% more to wait until summer 2012? (If they are lucky and on time).

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6 years 10 months ago
patriotz
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I don’t “know”. Nobody ever knows. I said IHMO we are at a top. The reason is simply the market collapse in BC which began in the Interior and has been moving closer over the last couple of years, leaving most of metro Vancouver stagnant and only a few neighbourhoods at the top end with rising prices. That’s that same pattern seen in most US metros up to the peak and I think it indicates the same here.

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6 years 10 months ago
Patiently Waiting
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@Patiently Waiting: I meant "will be borne" 😛

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6 years 10 months ago
Girlbear
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Seems like Larry has stopped posting daily numbers??

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6 years 10 months ago
curious lurker
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@Girlbear:

Seems like Larry has stopped posting daily numbers??

Perhaps when the lipstick loses its effectiveness, one must hide the pig.

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6 years 10 months ago
registered
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@19 Troll: I've been ranting about it for years, the feds used low interest rates and the CMHC to create a phony economy based on housing. It, along with the help of a truly spectacular self-immolation by the left, finally got them their majority. Prediction: rolling back the stimulus and rolling in the fiscal pain will give them leverage to take on the social safety net, European free trade, and a pile of other business friendly, people unfriendly core beliefs with, they hope, time to spare before the next election. Kiss the Canada you knew goodbye.

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6 years 10 months ago
rp1
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@patriotz: Good point regarding market top. I see the problem as being the economy, with too much spending going into houses and debt. If that excess was not committed, there would be more spending available for everything else, which would support more jobs and better paying jobs. The bubble has really robbed the economy of its excess spending capacity and then some. The people at the bottom have insufficient income to bridge the outrageous gap, so a correction is expected. It may not happen if magical green men from Mars appear buying Vancouver real estate on momentum.

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6 years 10 months ago