Remember when the area of False Creek that houses the Olympic Village was an semi-industrial wasteland?
Then we all pitched in and built an enormous number of high end condos at taxpayer expense.
Now everything is awesome.
…With the exception of a few problems.
It’s a busy Vancouver neighbourhood, that according to residents is riddled with problems reminiscent of the Downtown Eastside.
Police have been called to one building 215 times since May and that is more than 30 times a month, more than one call every day.
On Friday a cab driver was robbed in broad daylight and threatened with a needle.
The Olympic Village was marketed to families, retirees and young professionals. Some social housing was always on the table but condo owners say they did not bargain for this.
“I’ve seen an unfortunate drop in the cleanliness in the area because of random pets that people have,” says one resident. “There’s definitely a lot of garbage that has been left on the street, and graffiti, some people sleep on the stoops outdoors.”
“It’s become quite strange.”
Read the full article here.
Is anyone else getting tired of all the warnings?
Be careful how much debt you take on, be careful how much house you buy, make sure to save for retirement.
Well here’s another one: Stephen Harper has been told the entire countries economy is at risk due to record debt levels and the high cost of housing.
Municipalities are asking for the government to address high housing costs, but not everyone agrees.
… Finn Poschmann, vice-president of research at the think-tank C.D. Howe Institute, said Ottawa has “little jurisdiction and almost no practical capacity to deliver housing.”
“Past attempts to do so, through CMHC for example, have produced financial disasters for the people who participated and put CMHC in grave financial situation.” he said.
“We wouldn’t want to see that again, nor the federal mortgage agency deeply underwater and as similar U.S. agencies have been, through the course of much more recent financial disasters.”
Of course our current situation is that the CMHC has been pouring money into Mortgage Backed Securities to encourage buying, they recently had to cap this program because they couldn’t keep up with the growth.
It is likely that the government could reduce the cost of housing by simply pouring even less money into MBS.
The city just took one big step towards getting out of their Olympic Village obligations with smaller losses.
Dozens of market rental units have been sold in one bulk sale to an investors group at an average of $350k a piece.
“This is our first multifamily rental investment,” said Malcolm Leitch, chief operating officer for investment management at Bentall. Mr. Leitch is listed as the only director of the limited company that was formed in July by Bentall to take ownership of the property, BK Prime False Creek Residences Holdings Ltd. “This is in our view one of the top rental projects in the city. And we’re very happy with [the price].”
That sale of the 119 units will reduce the City of Vancouver’s leftover debt from the Olympic Village financial mess by $41.5-million in one swoop and get it out of at least one part of its landlord business in the development.
The city still owns the 252 social-housing units in the 1,100-unit project.
We’ve seen some pessimism about the losses faced by taxpayers on this project, so it’s nice to see that number reduced by $41.5 million.
So where does that leave us now for those keeping score? The city isn’t saying, but here’s an estimate:
It’s estimated by those close to the project that the city will lose between $240-million and $290-million in total – including the $170-million that was anticipated for the land, which it will never get.
There are still 90 unsold condos on the market and 26 more being rented.
Read the full article in the Globe and Mail.
There’s another article about the OECD report of overpriced real estate over at the CBC.
The Organization for Economic Co-operation and Development looked at real estate prices in developed countries and looked at price-to-rent and price-to-income ratios:
The report found that based on rents, Canadian real estate is overvalued by as much as 60 per cent and in terms of prices to incomes, real estate is still as much as 30 per cent overvalued.
“There is no denying we’re overshooting, vis-a-vis rent, vis-a-vis income, vis-a-vis demographics. So the OECD is not adding anything here to the debate,” Benjamin Tal, CIBC deputy chief economist, told CBC News. “That’s old news.The interesting question is not that we’re overshooting, it’s what will be the corrective mechanism, namely what kind of mechanism will we see bring it back to normal.”
Read the full article here.
Over at the Vancouver sun there’s an editorial by former BC supreme court justice Ian Pitfield proposing a rental vacancy tax.
This would be a tax that municipalities could impose to discourage vacant units held for speculation.
A vacancy tax would oblige a non-resident who beneficially owns housing accommodation in British Columbia, wherever the non-resident resides, to ensure that it is ordinarily occupied by the owner as a principal residence or available for rent at a competitive market rate. Failure to satisfy the requirements would result in liability for a vacancy tax equal to the monthly fair market rental value of the housing unit. The tax would be payable annually and not just at the time of purchase as is the case with the property purchase tax, or at the time of sale, as is the case with the income tax.A vacancy tax could increase the rental pool by some 15 per cent across the board, and by as much as 25 per cent or more in certain areas, if Mr. Yan’s estimate is correct. An increased supply of rental accommodation would also tend to put downward pressure on rents generally. The tax need not be seen as a bad thing by speculators. Avoiding the tax will produce income for the owner and offset the cost of owning and carrying the property in the course of speculation.
Read the full article here.