Vancouver, BC Provides Seattle With Yet Another Excellent Lesson About the Dangers of an Overvalued Housing Market

Comments

1
Two words: foreign investors
2
Commercial Drive? Seriously? It's the epitome of a gentrified neighborhood. In Seattle, you'd go off on the horrors of the displacement.
3
Wait. So in this magical economics you use where nothing makes sense except for politics, adding roofs doesn't actually put anyone else indoors?

It's even easier than supply and demand. It's dead simple mathematics. If you have a low vacancy rate, and you add more units, you allow more people to afford to live there. This tech worker can't afford a home because there are too many people that make more than him. Those people won't go away (unless by political solutions you're involving weaponry). They like Vancouver for the same reasons your friend does. The only solution that would put a floor under his feet is to build another floor.
4
"In physics, the effort to bring such extreme states or realities together causes nonsense to come out of the mathematics."

No, that's just what pretentious faux-intellectuals say when trying to ground their lazy bullshit in something more serious. Even if there were a grain of truth to it, anyone halfway serious would know that applying laws of physics to the housing market makes as much sense as talking about nuclear fission in terms of literary influences.
5
Yes, it is easy to see that the story is quite a bit more complicated than simple supply and demand in Vancouver, even more so than Seattle. It is widely speculated that Vancouver's high prices are driven by foreign investment. That might not be the case, but it is hard to deny that a programmer making excellent money being priced out of a market is beyond absurd, and shows that markets on their own can and certainly do run amok.
6
Tell your friend to look for housing along the rail transit lines outside of central Vancouver. First place I'd look is Richmond, along the Canada line.
7
@4) im sorry there is no bone of poetry in you.
8
two solutions: outright make it illegal for foreign investors to purchase homes they don't intend to live in (my preferred solution), or have an extremely onerous "non-occupancy tax" for foreign investors that purchase and don't live in said homes for at least X days of the year.
9
Cities like New York, London and Vancouver reveal the actual value of rule of law. Fortunes are can be confiscated on a whim in China and Russia. One obvious hedge is to park your gains in hard assets in countries like Canada, the UK and the US. There are posh neighborhoods in London that are practically unoccupied, except by Russian oligarch cash. Too bad the need for these absentee owners to protect their assets are jacking the prices for everybody else.
10
@8 I find it amazingly short-sighted to stop people from building housing in your city, occupied or not. And aiming laws and taxes only at foreigners? Doesn't that seem the tiniest bit xenophobic of you?
11
I feel obliged to say yet again that not a single person has ever provided a shred of evidence in these comment threads or in the published work of The Stranger to support the idea that foreign speculators are artificially driving up prices, whether in London or Seattle or New York or Vancouver.
12
@11:

That's what teh Google is for...
13
"In physics, the effort to bring such extreme states or realities together causes nonsense to come out of the mathematics."

One could study that sentence for the remainder of days and not draw a scrap of sense out of it.
14
@10 - "Xenophobic"? Are you missing something here? We're not saying that we should prevent foreigners from living in Vancouver, we're saying we need to prevent foreign CASH from using our cities as a speculative bank account.

More like "Numismophobic".

Do note that Charles did say that he is in favor of building housing. "developer over NIMBY" I believe was the phrase.
15
"Xenonumismophobic"
16
@10 Ah, yes, the new "Anti-racism" is the nobility of living in a card board box while Foreign billionaire oligarchs buy-up empty high-rises.

WON'T SOMEBODY PLEASE THINK OF THE BILLIONAIRE REAL ESTATE SPECULATORS?!?

Yeah. No. Nice try.
17
China now has 1.4 million millionaires. With the recent super hit film in China "Beijing Meets Seattle," overseas sales in the area have gone crazy. The often cited stat I read is that 1/2 of all the expensive homes in Seattle (million dollars or more) are now being sold, for cash, to Chinese nationals. That is absolutely distorting the Seattle housing market, from the top end.

What is a problem is that most of these homes are left unoccupied throughout the year, as they're largely being used as an investment/hedge against the Chinese Yen losing value. Not only does this take a home near the urban core out of the housing stock, but also ties up a large amount of valuable land for purely investment purposes. I'd imagine if this kept up for a decade or two, we'd soon see entire gated communities near the water, where empty Chinese owned mansions are kept manicured and cleaned by staff, while locals complain that they can't find a cheap apartment, let alone house, within an hour's commute of work.

http://www.seattletimes.com/business/chi…

the idea of entire neighborhoods filled with empty luxury homes, owned by foreign investors, has already happened:

http://www.npr.org/sections/money/2016/0…
18
@17 from your article, with Seattle Times quoting a Settle Times study: the number of owners with mainland China mailing addresses doubled since from 2007 to 2013 to 18.

Someone call the national guard. It's an invasion.
19
@18. Guess those 18 buyers must have bought expensive homes then . . .

"More than half of the $22 billion Chinese buyers spent on U.S. homes during the 12 months ended in March (2014) was spent in California, Washington and New York, according to the National Association of Realtors. "

http://money.cnn.com/2014/07/23/real_est…
20
Oh, and here's a solid stat from the Puget Sound Business Journal, with more concise data:

"Based on a survey of National Association of Realtors' members, from April 2013 through March 2014, the total sales volume to international clients was estimated at $92.2 billion, or 35 percent higher than the previous period. In Washington state in 2013, people from China bought nearly $2 billion in residential real estate"

$2 billion in residential real estate, at lets say an average of $1-million apiece = about 2,000 luxury homes in the Seattle area, in one year, going to Chinese citizen investment buyers.

http://www.bizjournals.com/seattle/news/…

Many of these are likely also related to the US "pay for play" deal with green-cards, via the EB-5 visa program.
http://www.voanews.com/content/foreign-i…
21
@20 It's true that immigration from China is up - it went from something like 120k in 2012 to 150k in 2013. But this brings us back to xenophobia. Do we not want Chinese immigrants in Seattle? Why can't we build enough homes for everyone that wants to live here? Will we start requiring a Seattle birth certificate be displayed with home sales?

Stop trying to micromanage. Let people build, and they'll stop displacing people that are already here.
22
@21:

The point is that: 1.) many of these investors are NOT in fact living here, they're merely purchasing real estate in order to park Capital away from the clutches of the Chinese government or off of the decidedly risky Shanghai and Shenzhen exchanges; 2.) Because of the investment policies established by the EB-5 Immigrant Investor Program to which @20 alludes, those wanting to get into the Program need to invest a minimum of $1mm and show the investment creates jobs in the local economy; throwing up a couple of $500,000 homes meet those criteria, so guess what? Lots and lots of homes and condos are being built in exactly that price-range, and in turn the overseas investors looking to park their cash are throwing down for the full purchase; great for developers, great for short-term employment, REALLY great for those in the EB-5 Program, but not so great for people looking to buy homes who DON'T have that kind of cash burning a hole in their pockets, even if they could otherwise afford taking out a mortgage. Sure, banks and investment funds financing home construction projects make more long-term on mortgage interest, but who's going to say no to a cool half-mil on the barrel-head, especially when there's a line of people waiting to put there money on it.
23
@21 its about the mobility of wealth and how the system is set up for it. Large amount of wealth buying a fixed resource is bad for those that don't have wealth. Many studies in Canada show the effect of the worlds wealthy has on a city:

http://blogs.vancouversun.com/2014/06/27…

http://www.theglobeandmail.com/news/brit…

http://www.vancouversun.com/touch/story.…

Canada had a forgien investment visa program that basically gave visa to forgien investors that "invest" 500k into a house. What do you think that does to a market? It articficially inflates prices.

Guess what, this program caused enough problems and was shown to have little benifit for Canada that they shut it down. Guess what America still has.

http://money.cnn.com/2014/02/12/news/can…

Now guess what studies do show, that while bringing in the worlds wealth has little postive effect on the country, bringing in refugees has a lot of postive effect. Studies show in Canada refugees pay more in income tax then those on investmebt visa.

http://www.cbc.ca/beta/news/business/ref…

So its not about what country people are immigranting from, but how the system is another example of failed trickle down economics.

24
"we're saying we need to prevent foreign CASH from using our cities as a speculative bank account."

This doesn't seem obvious, to me. Banks seem happy to have my money. Why do we need to prevent someone from paying upfront for an expensive project that will be useful for decades? if we build to Tokyo levels and prices come down - yay - we'd have cheaper places to live and a bigger, richer, greener city and world; if prices don'tcome down because so many new people move to the city - yay - the world has come to live in a beautiful corner and much sprawl has been domesticated; if prices somehow don't come down because of a never-ending speculative trade that somehow never loses even though there's a revenue generating alternative with the exact same characteristics - yay - then a rapidly aging world whose ecosystems can't afford current levels of consumption has discovered a magical new savings vehicle that's built under 1st world labor standards, not mined from under a contested jungle

don't call people names, MtE. you throw words around enough, and when the real thing comes around you're stuck gluing adverbs to the front of them
25
@24 shorter version, fuck everyone,