Bubble tea pointed out that back in March a study claimed that 10,800 homes were empty for more than a year in 2014.
They reached this conclusion by studying electricity usage, if it remained flat for 25 days the home was deemed to be vacant.
Of course many of these homes could have been occupied by paleo-humans who eschew electricity in favor of a simpler lifestyle. How many condos in Kerrisdale are filled with families huddled under blanket, burning their own waste to keep warm?
The majority of the empty homes in 2014 were apartments — 9,747 — and vacancy rates were highest on the West Side of the city, with 9.4 per cent in the area that stretches from Kitsilano to Point Grey and 8.6 per cent in neighbourhoods that include Kerrisdale, Dunbar and Southlands.
Suggested reasons for the vacancies included a home was bought for investment, was under renovation, the owners were on vacation, the home was caught up in an estate sell-off, or it was being flipped. A home was deemed empty in a given month if the hydro data showed a flat consistent use of electricity for 25 or more days in that month for a year. The findings were not specific to neighbourhoods but separated into five large geographic areas. Basement suites were not included in the study.
Are 10,800 empty homes a negative thing for a city, and If you had unlimited power what would you do to change this situation? Would you opt for incentives for owners to rent out empty homes or a some sort of system to try to prevent them from remaining empty?
This is probably the first housing editorial in The Province that most readers here can agree on. Well, the headline any ways:
Politicians shouldn’t meddle with the housing market.
Imagine a world where the government didn’t meddle with the housing market. There would be no CMHC insuring close to $600 Billion in mortgages, instead lenders would loan based only on their own assessment of risk. There would be no HBP, no HOG. In 2006 there would not have been the rule change that allowed zero down 40 year mortgages with interest only payments for 10 years. After 2008 the CMHC wouldn’t have purchased $69 billion of mortgages off bank books.
But of course you’ve probably figured out that this Province editorial isn’t about that. No, this editorial is about someone suggesting we should levy a tax on vacant properties, likely the tiniest possible example you could find for ‘meddling’ in the housing market.
Wong is not alone in unfairly blaming foreign investors for Vancouver’s high housing prices. The reality is that real estate is a commodity whose price is set in a free market, appropriately, through the forces of supply and demand. No one has a “right” to own a house in a particular city or neighbourhood, and it’s about time that people like Wong and her COPE and NDP pals stopped promoting such notions, especially when it involves taking money from one group and giving it to another. You want a house? Work hard and buy one — or move somewhere cheaper.
Read the full editorial here.
A new report from CIBC is warning of an excess of rental units in Toronto and Vancouver.
They are basing this outlook on the large number of condos being built in both cities and predict a less than half point rise in vacancy rates, so ‘warning’ sounds a bit strong.
The concern is that increased competition for good renters could drive owners to sell their condos, leading to a further downturn in the condo resales market.
Economists and policy makers have worried that an “increased supply of rental units will flood the market and will lead to a wave of sales by disappointed investors with no bargaining power,” Mr. Tal writes in the report. The Bank of Canada highlighted concerns about the condo market in December when it outlined the key risks to the economy.
“A sharp correction in the condominium market could spread to other segments of the housing market with stretched valuations, as buyers and sellers adjust their expectations of the future path of house prices,” the central bank warned. “Such a correction could also have significant repercussions on the real economy, since the construction sector is an important component of economic activity.”
Read the full article here.
This is kind of amazing.
yvr2zrh posted this analysis of the percentage of property listings for sale that are vacant:
Across REBGV 19% of listed SFH are vacant and 31% of attached/apartments are vacant. So – 50% as the comment from Jesse is higher than actual but not completely out of reach for apartments. Some variations are noted.
SFH Vacant stats (number/%)(in order or highest to lowest)
Richmond 175 – 24%
Van West 148 – 23%
North Van 55 – 21%
Port Coq – 22 – 21%
Whistler – 39 – 21%
Van East – 87 – 20%
Burnaby – 71 – 20%
etc . . .
For Apartment/Attached, the following are the vacant properties
Whistler – 177 (42%)
Maple Ridge – 94 (34%)
Van West – 522 (34%)
New West 110 (33%)
Van East – 169 (33%)
Burnaby – 261 (31%)
Richmond – 298 (31%)
North Van – 115 (30%)
So, even if you have people who just want to hold back, why would they when there is cash outflows to carry the property and the future outlook is for price decreases?
Those who just hold off selling, where they are actually living in the unit, and are waiting for prices to increase, are bound to die living in that unit.
Later today, I will post my predictions for the 2013 market based on my model. What is really helpful is the MOI/monthly price change graph. That has been a really good indicator of price movements. Thus, I will post the projected MOI movements for 2013 and then we can see where the prices fall. It is important to know that listing volumes are down from last year. This is sufficiently so that we may see 2013 inventory intersect the 2012 inventory possibly at the end of the Spring and then track 2012 for the rest of the year.
This will be interesting to watch because once we are down 10-15% from peak prices – how can they continue to say things like prices are flat and this is a soft landing? I would say any decrease of 20% from the peak is not good as you immediately remove even more move-up buyers and put 1000′s of people underwater immediately.
This is odd. The Globe and Mail published an article about the condo boom titled “How condo boom threatens a ghost city phenomenon” and included the following alarming section:
“CMHC estimates that roughly 25 per cent of condominiums in the Greater Toronto Area are sold but sitting vacant — shades of Miami at the height of its collapsed condo bubble in 2007. Other analysts say the 25 per cent figure may be too low.
“This is the ghost city phenomenon,” Mr. Holt said.
Condo developers in Eastern cities such as Toronto, Montreal and Ottawa, appear to be rushing to sell and build units before interest rates start to climb, and the market crashes.”
But if you visit that link you’ll no longer find that text and the headline has been changed to “Housing starts shoot higher on back of condo boom” (although as of this writing the URL still shows the original title). Why the dramatic change in tone?