I'm curious how this problem is unique to Vancouver. Berlin's real-estate values have risen some 40% in just the last 7 years or so. New York City, in the 10 years I lived there, had an enormous escalation in what you get for the same rent payment, even adjusted for inflation. Big cities deal with this all over, so how do they deal with this "problem," or is Vancouver somehow unique in other ways?
I think Vancouver's problem is that they don't have a strong economy otherwise. Berlin and new York are bad but at least they offer well paying jobs. That's what I gathered from a coworker who used to live in Vancouver.
Exactly. I'm currently working as a software engineer here, and the average wage is significantly lower than what Seattle companies offer (even if you ignore the difference in exchange rate). This combined with the housing affordability crisis makes it easy to leave.
Over the last five years, the Canadian Dollar has declined more against the Yuan than the Euro or USD. It is mentioned in the article. I think that explains why Chinese investors purchase more property in Vancouver than say, Seattle.
The trend of foreign investment in the Vancouver market has been occurring well before the slide of the CAD. The immigration regime in Canada is much friendlier to foreign nationals, and especially so if they are wealthy. Until 2014, the federal government had an investor visa program that offered a route to permanent residence and citizenship in exchange for $800,000 investment (not in real estate) and demonstrable assets of $1.6 million.
Vancouver is not unique. Similar problems exist in many cities around the world. Vancouver today is a more vibrant and economically diverse city than it has ever been. The conversation over the direction of the city is contentious pitting the old guard against the new guard, the haves vs the have nots. I would say San Francisco and Seattle have similar issues. And like you say, Berlin and Munich probably have similar problems. Although I'm not sue if Germany is seeing similar large inflows of Chinese capital and immigration.
I mean, look at the Bay Area. They command some of the highest rents in the country, and many tech-sector workers are able to "get by" because of higher salaries from their employers. Of course, if you're not in the tech sector, you're forced to live in more affordable outskirts, like East Bay.
In NYC, they have fantastic transit, so if you don't live in Manhattan, you can still get to work relatively easily. That infrastructure investment has helped NYC maintain its desirability.
Meanwhile, Toronto has a similar problem to Vancouver, except we're building tons of condos. As long as you adjust your outlook to realize that you may only be able to afford a condominium (to buy or rent), you can make it work. Otherwise, you can move to the suburbs, but our transit is garbage, so good luck with that.
Of course, I've simplified my points and glossed over the nuances. But I think the solution is really:
1) Higher density housing (i.e. high-rise residential)
2) Much better transit
3) Options for affordable rent-subsidized housing in these developments
If you do those things, I think you'll make it easier for millenials to choose to stay, and still encourage a diverse community that's not made up of just high-income tech or finance workers. Places like Hong Kong, Tokyo, NYC, Singapore, and many more seem to be thriving cities, and I think those are the factors they have in common.
Toronto's transit is indeed pretty trash. I want to move down to the city but I'm split on whether to put in a down-payment for a condo or piss away my equity by renting. They say the condo market is very volatile right now. Not sure how true this is because I am not very well versed on the subject.
Hey there, I used to work in the condo industry in Toronto. If you had asked me 5-10 years ago if buying a condo was the right decision, I would have said yes. But now, absolutely not.
What changed is the respect the builders have for the people buying and living in their buildings. 5-10 years ago, condos were a bit more rare, so a construction company had to try really hard to make their condo appealing. They worked slower and the architecture was much more livable. Spacious units, sensible parking and elevators, and catchy amenities like pools and fitness rooms.
Now, they pump out condos like a sweatshop. Instead of 8 units on a floor, there are now 12. Instead of a pool, you get a gym, and instead of a fitness room, you get a yoga studio. Elevators that serve more than 30 floors are too expensive, so those 50+ storey condos need 2 elevators; one to take you from 1-30, and another to take you to from 30-50. Every single new condo in the last 5 years is in litigation with the developer due to issues with the building. Contractors like plumbers and electricians know the game now too, so every bill from a contractor will be $999 (regardless of work done) because anything over $1000 requires board approval. Without a strong property management team, I expect half of the condos will be bankrupt within a decade.
If you want to buy a condo, buy one in a building that is more than 10 years old. They will have sorted out the engineering problems by then and their budgets will be inline.
Heh,
Things I've heard about recently in Toronto new-build condos:
1) Mailboxes are in the basement, so you can't check on your way in.
2) Each unit having a loud spaceship/heat pump instead of one central one. Heat pump is leased, not owned by the unit, so you're paying $45/month in perpetuity. Maintenance not included.
3) Submetering of electricity, where a quarter to half of your bill is in the delivery charge from a random power company (times x units of the building, instead of one for the whole building and incl. it in condo fees)
4) New condo board isn't allowed to fix/improve various promised things until the builder fixes it. Builder waits for it to time-out for 3 years and then the Board has to arbitrate/mediate it with the Builder. Meanwhile, condo board can't touch it.
5) Builders signing exclusive contracts with telecoms, so you can't get service from anyone else.
6) Locks not keyed right, so residents' keys can open mechanical rooms/rooftop access
7) Gym on the second floor, so residents below feel like they're living in a bowling alley
Well, thank you for your perspective - I guess I won't be buying any property any time soon - or at least not until I do extensive homework. Thing is - as bad as the situation may look like now compared to 5-10 years ago - I'm just thinking of how much higher real estate prices will be 5-10 years from now. So if I want to reap any future benefits now looks to be the time. I just feel it would be really unlikely to get deals as good as we had a decade ago. I'd like for the bubble to just pop a little bit before I start thinking about purchasing a condo seriously though.
On a weekday, Caltrain stops going south between midnight and 5 AM. Bart going east shuts down around the same time.
In Manhattan, subways run all night to the different boros, Metro-north, the LIRR, PATH, NJ transit etc. run through the night.
People say NYC is expensive, and living on the upper east side or west village can be expensive. But plenty of safe, cheaper places are a 20 minute train ride from Manhattan, and even more are a 30 minute train ride (and so on). You don't get options like that in the Bay Area.
I've lived in Boston, DC, NYC and London for extended periods of time, and spent a stint in Berlin. It's tech scene is awesome - if you find the right group of people it feels like CCC year round. It's art, music and food scene was an amazing value for the money when I was there circa 2011.
I'm guessing the equivalent of their hipsters got wise to it and drove up prices a la the gentrification you saw (compare the between the dirty-grimy NYC of the "Taxi Driver" 1970s vs the clean power-tie NYC of the 1980s bond-trading years, or the early 2000s Williamsburg where the rent was somewhat reasonable vs 2010 where anything on the L costed literally 3 times as much because every white kid with a fixie had his parents pay his $2600 rent, etc. $800/mo on a split isn't too bad for Boston if you're anywhere close to a decent spot on the T, considering the supply/demand (it's arguably the biggest college region in the US - between Cambridge, Boston and BC in Newton it's probably the densest student:non-student ratio in the US). Berlin had that vibrant feeling that's hard to explain but yeah the tech scene was (and hopefully still is) spectacular, especially re: the hardware hacking scene when I was there and it's certainly worth a visit.
Edit: http://ccc.de/ In math if you solve something major, odds are you'll wait till that years AMS Symposium to present; if you crack the PS3, CCC is where fail0verflow went to present. (Don't write them off because of their l33t-name, these guys aren't script kiddies -- these hacks are worthy of PhD theses if you see the detail of reverse engineering they go into.).
I moved to Berlin recently from Sydney. My rent is 60% of what I was paying in Sydney, and for a nicer apartment. I can't believe more people aren't moving here.
(Maybe I shouldn't say so. Keep the secret to those who know.)
And while rents are still cheap compared to other large western cities, they went (and are going) through about the same curve as these more expensive cities - it simply started lower here.
Well, as someone who's considering Australia and NZ as potential destinations, both language and visa situations are big hurdles to clear for moving to Berlin.
Maybe you have an European or U.S. citizenship, but they're harder towards South Americans. Also, software development salaries weren't something to write home about last time I checked (that was some a long time ago admittedly).
Edit: According to Glassdoor, Berlin Software Engineer Salary: €48000 (average)
So, not worth jumping through all the extra inmigration hoops compared to Australia or New Zealand, not to mention the language barrier.
My grandfather was German-born and they didn't grant the citizeship to him, and I remember the ridiculous requirements he faced trying to get it (and he was more German than most actual Germans, a Fischer Reuter Spangemberg and more German surnames all the way down)
"The paperwork is nightmarishly complex and requires a wealth of information, with endless pages and extra documents. Sometimes translations are required, sometimes not. In fact, she no longer sends the papers off without consulting an expert. Anders works as the human resources manager for Adidas. She is looking for skilled workers in Europe, the Middle East and Africa. These days, even a company like Adidas rarely finds new employees in Germany, especially IT experts and designers."
Yeah I guess it depends on your situation. For us it was a lot easier due to EU freedom of movement laws. It just sounded funny ("funny") cause it always seemed so much easier than moving to the US when I looked into it.
I also know a lot of Israelis who got German citizenships via their grandparents, but there might be special rules that make it easier for victims of the nazis (and their descendants) or people that fled the country.
Either way the salary is probably never a reason to move to Germany (I don't think wages are higher than in any other western country), I meant more like that it's not a reason NOT to move in that particular example.
I'm in London now but used to be in Auckland. 40% over 7 years sounds blissfully slow after the insanity of Auckland - a city facing a very similar situation to Vancouver.
Berlin is unique in that this city has some very tough housing laws. You're better off being a renter than an owner. Because of that flippers and investors have shied away.
I can't remember where I heard but the city controls the rental rates. Don't want to pay more for a property than you can recoup. And you don't want to leave it unoccupied less you come back to find it squatted; and they have rights as well.
Because it is so highly regulated its not a great investment.
Berlin is in a pretty unique situation. It was a city where most buildings stood empty and with few jobs, especially in the high paying sector. The only pull factors were low cost. This changed only slowly after it became the capital again.
I live in the Maryland suburbs of Washington, DC. Real estate in DC is very high and did not suffer as much in the Great Recession, due to the extremely limited supply of available housing. But I don't think our problem is foreign investors. Many people who moved into the burbs in the 80s and 90s now want to move back, as DC becomes more desirable. I see young people everywhere, even though it's hard for someone just starting out to buy here. But because DC can't physically grow as a city, it becomes harder and harder to find places for new housing.
Out here in the burbs, it's a different story. A development just down the road from me suffered very badly in the downturn, with houses losing as much as 50% of their value. Some of those owners will never be above water on their houses. I'm very glad I chose not to move from my townhouse into a single family home a decade ago, as prices soared, even though I really wanted a place with a mad scientist basement workroom. And as my friends retire, most are moving to warmer and/or cheaper places.
> Big cities deal with this all over, so how do they deal with this "problem,"
As far as I can tell, they simply don't. I don't think there is any city that "deals with it", or even tries to, in any way.
Every city I can think of that has value in living in, is experiencing explosive bubble-like growth in them. Even the supposedly "cheap" or "low cost of living" cities are undergoing this process.
I think most cities secretly want this to happen, since it leads to higher property taxes and drives out members of their community they consider less desirable.
Vancouver is unique simply in the degree of unaffordability. After Hong Kong, its housing is the most unaffordable in the world.
The elephant in the room is why this happened. Everyone talks about "foreign speculation" but in fact most of it is not speculation at all. In mainland China, Vancouver is widely viewed as a nice, quiet small city, good for students and the elderly. It's not a place for "real" work. So they buy homes there to live in part-time. It is quite normal to have the mother and child live in Vancouver while the father continues to work overseas. They pay almost no Canadian tax as they have no Canadian income. With their child in school, the parents can eventually claim permanent resident status thanks to the family reunification program and they can expect to retire in Canada. It's a big win for them and they see nothing wrong with it.
To summarize: introducing vast income inequality has distorted the Vancouver housing market and drastically altered the demographics of the city, making it unaffordable for the people who actually work and pay taxes there.
> There are already enough houses and condos in the city with no lights on because no one actually lives in them.
To me, there seems to be a pretty obvious public policy response. Institute a very high property tax, which is abated on some kind of curve according to the amount of time the owner or tenants spend living in a property, with no tax being due if the property is legitimately occupied for more than, say, ten months.
It might not solve the problem entirely, but at least you would reduce the effect of a diminution of housing supply that is driven by these kinds of absentee owners, and that must be driving up rents, at least.
What you're describing is similar to the approach south Florida takes - assume many purchasers are non-residents, and therefore rely on property taxes rather than income taxes to fill the coffer
This is normally done via a "Homestead" tax exemption, where if your vacation home is assessed at $100K, you get taxed on all $100K, but if you live on it, you only get taxed on $100,000-N, where N is the exemption. This is meant to encourage owners occupying their homes, which is a great thing. I don't know if they have it in Vancouver.
In California, the exemption is a measly $7000. Which is essentially nothing, given home prices in the Bay Area. What they need to do is increase that number 10-20X or make it a percentage of the home's value. This would greatly help solve the problem of foreign "investors" buying up all the housing, leaving it vacant, and essentially just treating homes like bars of gold in a safe.
And don't even get me started on Prop 13, which is essentially mechanism to transfer wealth from younger, newer residents to older residents.
I'd like to just see a return to homesteading period. If a property goes unused / unoccupied for a year, anyone can move in. No more land squatting to drive up real estate prices and use it as a store of wealth.
Yes, this kills real estate as a long term investment. No, that is a good thing, we should collectively much rather see capital invested in the stock market rather than being thrown into precious metals or property as a store of value.
Except I'm not - there already exist squatters rights to occupy someones elses property and eventually claim it their own if they can avoid detection long enough.
All that takes is the minimum effort to police the property you own to insure nobody is squatting. What I'm saying is that unconditionally whether or not someone is illegally occupying your property you only have a fixed amount of time to make use of it before it effectively becomes unclaimed land again.
"Land Registry will decide if your application is valid and will let the property owner know. The owner has 65 days to object - your application will usually be automatically rejected if they do."
So basically you'll only get to stay if the property is effectively abandoned.
My recollection of squatter's rights is that the owner has to know you are there, and do nothing for <X> years. If you are hiding, you can't lay claim.
And how much do your 'Occupancy Police' cost to administer such a system ? If it relies on a property owner filling in a form, they're just going to lie to avoid the cost and without someone going round to every single house and monitoring it for weeks and months of the year, you have no way to detect people avoiding the tax.
Super high property tax when I'm not there? Simple, employ a cleaner on some minimal wage and let them stay there when I'm not in town. When I'm in town, put them up in a hotel. I'll probably still save money on the property tax and I can claim to be a caring employer, helping with employment in town. The city council are evil job destroyers by sticking me with huge taxes.
Scotland implements a 'second home' variant of their 'council tax' [a weird name for property tax]. Depending on area, it's a locally chosen multiple of the standard tax. But that's based on whether people declare another property and there's a lot of overhead in policing it. I doubt if it actually raises any extra net income.
But what if your empty property is actually from a relative who recently died and the estate is being finalized? Does that get hit too?
It always sounds simple to just slap extra taxes on rich people (who always happen to be defined as someone other than yourself), but that often leads to unfairness to decidedly non-rich people.
Rich people always find a way round these things - they pay lawyers and accountants to make sure they can. No public policy will ever fix that.
Why would you? Tax is a very effective mechanism to control economy. And don't have to think on extremes even! Very wealthy people are buying condos there just because it's the best (passive) investment for their cash. If you increase tax for vacant property it will incentivize selling over time,or at least renting.. more offer with less cost.
In a macro economical sense Canada already profited from getting foreign $ invested in buying those properties anyway, time to make Vancouver livable.
> Super high property tax when I'm not there? Simple, employ a cleaner on some minimal wage and let them stay there when I'm not in town. When I'm in town, put them up in a hotel. I'll probably still save money on the property tax and I can claim to be a caring employer, helping with employment in town. The city council are evil job destroyers by sticking me with huge taxes.
Doesn't that kind of help the problem though? Because now someone who would have to rent an expensive apartment is now basically living rent-free in a home. If enough people did this, it would help alleviate the issue.
I agree with your point though, and know people who do this. They are "caretakers" who basically live rent-free to make sure the place doesn't fall apart. The occupancy idea sounds good, but it seems like a logistical, administrative pain to enforce.
I used to live in Florida and amazingly enough the homestead exemption works pretty well. I'm sure there are some people abusing it, but it's effective overall. You can only have it on one home and it doesn't apply to businesses so the only real fraud angle would be to live out of state and take the exemption on a single Florida property. You have to be a citizen or permanent alien resident which weeds out foreign buyers looking to park money. You'll also need to be able to access its mailbox, be registered to vote at the address, etc etc. A lot of potential legal trouble for a $50,000 valuation haircut on your tax bill.
The fact that Florida has no state income tax is an even bigger incentive to actually reside in Florida if you have a lot of passive income coming your way.
You can purchase Canadian permanent residency for $800,000 through Quebec's Immigrant Investor Program. This has a big impact on Canadian tax policy because there is no way you can discriminate between foreign and domestic ownership - foreign investors can simply buy a PR card and avoid punitive taxation of foreigners. There are still foreigners in the normative sense of the word, as in they don't and have never lived in Canada, but in the eyes of the law, they are the same as an permanent immigrant.
You can require presence in the country to a homestead exemption. If you aren't in the country for a large amount of time (say, 180 days) you don't get your exemption. Between that and having it only apply to a single property the incentives to park cash in an empty Vancouver apartment are diminished.
I would be careful here. Laws like this are close to demonstrating a lack of respect for property rights and that is not a good direction for any democracy.
We have always had areas where the cost of housing was too high but the reactionary idea of taxing it to death is in effect the idea of that some property rights are important but others are not.
If any such idea was pushed then be sure that protection is applied to citizens of the country involved. Even this is dangerous as it tells foreigners that their money is welcome but their rights are subject to the whims of the times.
The real solution is, build more places to live. What is preventing the building of affordable housing? Find that and fix that. The response is far more proper and rewarding than trying to force someone out of their property because you think they don't deserve to own it if they don't live in a set amount of time
It became vital back when economies first started to specialize.
If you take the net the fisherman wants to use and string it up as a hammock, you're going to eat fewer fish later. If you take the blacksmith's tongs and use them to crack walnuts, you're not going to get that handful of nails that you wanted to build your house.
Property rights alleviate the tragedy of the commons, by taking resources with multiple possible uses out of the commons and dedicating them to uses other than just the one with the highest immediate value.
It should be obvious that you can't plant a field on the same land footprint as the foundation of your house. You can't build a road over it at the same time that it's under an apartment building. Property rights are part of our system for resolving the conflicts behind multiple competing exclusive uses for any particular thing.
They are not absolutely essential to democracy, but they are the best solution we have yet tried for resource allocation in a specialized economy, and democracies tend to fare better when there is enough prosperity to spread around to everyone.
In all your examples, you're talking about tools that would be finding direct use. How do you reconcile your allegories with empty houses purchased solely as stable investment vehicles instead of actually housing people?
That's just like the fishing net used as a hammock instead of catching fish. A house used for housing is a productive purpose. It is generating value to the economy every minute that it is being used as shelter for humans. That value diffuses out to more people through trade. When used for speculation, it is not producing value, but simply storing it for later use. Meanwhile, those who would otherwise produce value from it are producing less value in aggregate because they are denied access to at least one house.
If you put gold in a vault, it retains its value. But it cannot be used productively. If you instead loan the same gold out, you can charge interest, and some of the value generated by the gold performing its productive function as money will diffuse back to you via trade.
As a whole, the entire economy would prefer that all tools be put to productive use 24 hours a day. But the individual Nash equilibrium strategy is to selectively employ or withhold the use of those tools for greater personal benefit to the tool owner.
In the government's role as cartel enforcer, it would be in the interest of the whole cartel for the enforcer to levy a vacancy tax on investment properties. That reduces the personal benefit of idling the productive tool, but the enforcer then also has the burden of returning that value to the economy in a productive way.
It's perhaps a small step in a direction away from the pure capitalist conception of how property rights should be structured, but such a movement is no more a sign of lack of respect for property rights than the move to the capitalist model of such rights from prior models was.
It's not like God handed down the capitalist model of property rights carved on stone tablets...that model is just one stage in the continuous historical evolution of the concept of property rights.
>To me, there seems to be a pretty obvious public policy response. Institute a very high property tax, which is abated on some kind of curve according to the amount of time the owner or tenants spend living in a property, with no tax being due if the property is legitimately occupied for more than, say, ten months.
This punishes newcomers and rewards staying in the same property, just like California Prop 13. Have a kid and need a new place with more space? Prepare to pay punishing property taxes for that luxury. You grew up in the area and it's time to move out? Enjoy your tax! Moving from the countryside for better employment opportunities? Tax please!
Because of the strong disincentive to move, there's now going to be fewer units on the market than would otherwise be expected. House prices go up, not down, and the moving tax is likely to be regressive.
>It might not solve the problem entirely, but at least you would reduce the effect of a diminution of housing supply that is driven by these kinds of absentee owners, and that must be driving up rents, at least.
In this case it will exacerbate it, just like Prop 13. It's really a moving tax disguised as a property tax.
There is, however, a tax that will punish absentee owners but also not create distortions: a land value tax.
It's similar to a normal property tax, except it's on the value of the land only, not land and improvements or improvements only. A single family home on a particular lot is taxed the same as a skyscraper or an empty lot sitting on that same lot.
This punishes land speculators and NIMBY types, cannot be passed on in rent (normally taxes decrease the supply somewhat, so some of the tax can be passed on, but land is fixed in value and a tax cannot reduce its supply), and does not punish building like a standard property tax does. It allows cities to capture value from infrastructure improvements, such as running a new transit line.
The practical concerns are similar to a standard property tax: how do we do assessments? The great thing about it is that land is easier to compare than buildings are.
> This punishes newcomers and rewards staying in the same property, just like California Prop 13. Have a kid and need a new place with more space? Prepare to pay punishing property taxes for that luxury. You grew up in the area and it's time to move out? Enjoy your tax! Moving from the countryside for better employment opportunities? Tax please!
Can you explain why this would be a moving tax?
Obvious, property taxes only apply to the fraction of the year that you own a place. Are you worried about the overlapping period where you have the house on the market but haven't sold it yet?
I suppose that would be an issue, but I assume for most people, that's a relatively small fraction of time. It's not like there aren't already lots of other expenses associated with moving.
>Obvious, property taxes only apply to the fraction of the year that you own a place. Are you worried about the overlapping period where you have the house on the market but haven't sold it yet?
The proposal was to create a property tax that phases out once the owner has lived there for X period of time. Naturally, every time you sell and move you then reset this clock, so you'd pay the property tax only if you keep moving. The most monetarily rational strategy is to buy and hold forever if at all possible.
In short, the only way to trigger this tax is to move.
Trouble with a land value tax is that most cities have severe restrictions on redeveloping properties at a higher density, so you have to design all sorts of exceptions or end up with the family living in the poky little flat in a historic building on the edge of the city centre paying more in tax than the property speculators who've bought the penthouse suite in that new multistorey apartment in the exclusive riverfront district.
A lot of the young people go back to Asia for better jobs after graduating. Silicon Valley and Seattle are popular destinations. Also some move to Toronto or Montreal.
I went to UBC, Vancouver from my undergrad. A large part of my friends moved to the US (since the exchange rate works in your favor). Calgary and Toronto are also popular.
Suburbs of Toronto for me and several of my friends from my time at UBC. A lot of us were transplants from across the country, tried to hack it professionally in Vancouver before eventually being driven elsewhere by job and housing prospects.
Correct, although it's a small lie as you still submit paperwork which states what your job actually entails (albeit with an emphasis on design and such over actual programming every day).
After ubc I went back to the states along with everyone else who got the chance - otherwise calgary, Toronto and montreal, or asia. Kids in Asia who have ubc/northamerican degrees are treated like golden children from what I hear. A former roommate from jakarta said he applied to langara cause even that's prestigious lol
There's a lot of this, yes. And the suburbs aren't necessarily very suburban: I live in a 30 floor condo tower in Burnaby, and within 2 block radius there's a dozen similar towers and twenty more 30-60 floor towers in various stages of zoning hearings (8) / building approval (7) / digging big holes (2) / towers going up (3).
There are two major phenomena at play in Vancouver:
1. Across Metro Vancouver, the supply of land for single family detached houses is very constrained; this is pushing prices of detached houses up dramatically.
2. The City of Vancouver proper is very hostile to development, due to a toxic combination of NIMBYism, height restrictions to maintain "view corridors" of the nearby mountains, and social activists who think that building more housing will somehow make housing less affordable.
But if you're willing to live in a condo and you don't mind living a 20 minute train ride away from downtown, the cost of housing is far more reasonable than hysterical media reports would have you believe; and unlike detached houses, prices of condos have barely kept up with inflation over the past decade.
How confident are you of not getting a multi hundred thousand dollar assessment when the condo starts leaking or otherwise falling apart? Owning a condo worries me, no control over the maintenance, no ability to do any changes to it, no space to start a family.
The roof on your house can suddenly start leaking, too.
Vancouver was plagued by "leaky condos" in the 1980s and early 1990s, but that's over now: This happened due to a rapid expansion of condo construction using building designs suited for a drier climate. There have been no signs of problems in newer buildings.
Stata corporations are normally supposed to have depreciation reports prepared in order to identify upcoming costs; unfortunately these can be waived with a vote of unit holders, and most do. The best remedy here is to not buy a unit which doesn't have a recent depreciation report.
no space to start a family
In terms of $ per unit floor area, condos are cheaper than detached houses. Sure, you don't get a lawn... but you get access to lots of other amenities. I'm not convinced that raising kids in a condo is as hard as people think.
I grew up in the region and went to school there. Left for Ottawa. I'd say most of my friends left. I still read the Georgia straight and follow the news. It is kind of home after all but one I will never go back to.
I lived in Vancouver briefly and worked as a developer. The salaries are horrible when you factor in living costs. You can get a much higher salary in Toronto, Ottawa, or Waterloo.
Seattle has a bunch of similar articles about "outsiders" supposedly driving up housing costs. Which is absurd: steel frame construction and elevators are very old technologies that allow humans to build just about as many housing units as can be desired.
I'm not sure if you're familiar with Vancouver but outside of the small downtown core, there isn't much zoning for density. Government policy has created a supply shortage.
Housing cost has very little to do with construction and everything to do with location.
Real estate as an export is .. well, it's a response to circumstances, I suppose, but is it really sustainable? After all, you can't just make more land with the property "within 1km of Central Park".
What happens when the majority of a city is owned by foreign landlords? Do you think that might distort its politics?
London has had an influx of foreign property investment over the past 20 years. Now you need an income in the region of $120,000 and a $150,000 deposit to buy your first home. Even our members of parliament are struggling to buy anything[1].
Foreign property investment is very bad for the long term prospects of a city.
And yet London's population continues to grow at an astonishing rate, and businesses continue to move into London. Doesn't seem like the high prices are doing any harm to me.
A single bedroom, that when built as the spare room for kids to play in or a visitor, costs £400/month.
Myself and several friends have left London. Perhaps I've been replaced by a 21 year old British graduate, but this seems less likely than 10 years ago.
Well, someone's replaced you, since the population is growing rather than shrinking. I've only been here 7 years (since graduation) but more and more of my similarly-aged friends are coming to London. I think it's young people rather than retirees, graduates rather than not, and I'm not sure I care whether British (though I think most are).
I lived in London for 10½ years, from when I started university.
Most incomers are young people, but not all are graduates — many come from Eastern and Southern Europe and work low-skill jobs. I put "British", but probably meant someone one would expect to live in London for a long time. I got to know a few construction workers from Poland and Romania, and none of them had any intention to stay — they were in London to make money, and several had wives/children 'at home'.
This can make a functioning city, but it's a change from London of 20 years ago, when it would be artists and musicians taking some of these cheap houses and I think fewer people were there to make some money and leave.
A good part of why I left is because it wasn't as interesting as it used to be. I wondered if I was getting old, but then, "of the 430 music venues that traded in London between 2007 and 2015, only 245 are still open" [1]. I certainly noticed that there were fewer gigs I wanted to see, and they'd moved from Friday/Saturday to weekdays.
The other part: I was working for a scientific charity, with charitable pay. I wasn't saving much money, even with living in a shared house, so decided I needed a new job. I wanted to continue writing software for science, so there weren't all that many jobs that interested me in London.
> Most incomers are young people, but not all are graduates — many come from Eastern and Southern Europe and work low-skill jobs. I put "British", but probably meant someone one would expect to live in London for a long time. I got to know a few construction workers from Poland and Romania, and none of them had any intention to stay — they were in London to make money, and several had wives/children 'at home'.
There's always been people coming to London for a few years to make money. Ten years ago maybe it was the Australians coming over here to work in bars and restaurants. I think construction workers would always have been moving around (certainly my dad did); there are probably more of them now than ten years ago but more construction is hardly a bad thing. I certainly don't think there are fewer skilled jobs for graduates than there were: the City has been adding more and more jobs and sprawling down to London Bridge, tech has boomed in Shoreditch, Bloomsbury and elsewhere, there's that huge new medical campus effort around King's Cross. The BBC has sadly been driven away for political reasons, but I don't think there's ever been a better time to be a graduate moving to London.
Where is cheap has changed. Music, indie theatre and groundbreaking art have been pushed further out, to Camden and Highbury and Shoreditch and Hackney and Brixton and Clapham. Soho is halfway to being Knightsbridge. But that's always been the way of these things.
> "of the 430 music venues that traded in London between 2007 and 2015, only 245 are still open"
I have no idea what the real numbers are, but I can tell that's a line designed to mislead, to make you think there has been a decline in the number of music venues without actually giving any evidence for it. How long did those 430 last, on average? What proportion of the music venues that traded between 1999 and 2007 were open in 2007? Indeed, how many music venues were open in 2007? What's the betting it was less than 245?
> The other part: I was working for a scientific charity, with charitable pay. I wasn't saving much money, even with living in a shared house, so decided I needed a new job. I wanted to continue writing software for science, so there weren't all that many jobs that interested me in London.
You pays your money, you takes your choice. Some jobs and some people are surely getting priced out of London. But the city as a whole is doing very well thank you.
Well, correct. There are lots of other expensive things you can buy which don't have any issue with price increases no matter now many people want to buy. Boats, for example. If lots of people start buying boats, then the number of boats being made increases, but the price of boats doesn't really change.
We can build units quickly and relatively cheaply (certainly the cost of building has fallen over time, certainly on a like-for-like quality basis. As you say, steel frame buildings with lift access can create housing units quickly and cheaply.
The issue is restrictions on supply caused by government policies and nimbly-ism, plus a general desire to shelter parts of the community from market forces.
It wouldn't matter how many Chinese investors wanted to buy apartments if supply kept up with demand.
> are warning that it’s going to be nearly impossible to develop this business into anything meaningful unless the affordability question is addressed.
one way to address it, and I know this is crazy guys just bear with me, is that these tech leaders could start paying more money. No hope to afford a condo at 75k a year? how about at 150?
Vancouver is simply not that much better than Seattle that I would go back. The salary difference is just too high, especially with the favorable tax situation in washington and the lousy dollar.
Slightly off topic, but is the supply significantly higher than the demand out in Vancouver? I've always wondered how companies could get away with the abysmally low salaries for dev roles vs anywhere on the east coast relative to living costs.
Yes many people love Vancouver because of the weather (esp relative to the rest of canada) and the proximity to nature there are also a lot of recent ubc/sfu grads and kids from other Canadian schools who find van desirable. This combined with few roles to begin with gives you the current situation
Come to Montreal! It's great here. No way would I want to pledge the rest of my life to a bank in exchange for the right to exist. Rent controls here.
It's odd: it's like the state understands that banks are bastards.
Montreal has some issues with organised crime but nothing compared to the organised crime of banking / money laundering through land. I don't have to pay some gangster $1MM for a shack.
Leave the boomers to their trinkets kids. Walk away. They need your labour, the rest is just paper.
I wonder how much climate is playing a factor in Vancouver's issues. Just from my perspective, I'd love to move to Vancouver, but would never, ever consider Montreal, not because it's not a beautiful city, but because of the harsh winters.
Other people don't seem to really care about weather extremes or scenery, etc. I have no insight into these real estate investors dumping money into property, sure if they aren't living there, there's some other factors involved.
I'd argue climate plays a bigger factor for people who actually want to live in Vancouver, rather than absentee investors.
That said, having grown up in Vancouver, I'd consider Montreal - seeing the sun in the fall/winter is a really nice concept I've gotten used to. I've gotten used to harsh cold of the east coast, but I never got used to the dreary vast grayness even though I spent most of my childhood in it.
Keep in mind that some people also like the climate of places like Vancouver. I would count myself among them. I moved from Dublin to San Diego (supposedly known for nice weather, somehow) and the weather here is awful; I can't do anything outside without becoming a sweaty mess 9 months of the year. Apparently it's been like this the last several years in a row, possibly indicating a substantial change in the norm, but people lie to themselves about how it's always pleasant here even while it's 90F.
Don't. I'm seriously thinking about moving to Toronto right now. I have a Soft. Eng. degree from McGill and I can't find any business in this city that will pay me minimum wage.
Wat? Are you even trying? I didn't even finish my comp-sci degree at Concordia and since I've started working I've never had to go unemployed between jobs. If you're a skilled developer there is no reason why you should be unemployed right now.
I visited Montreal a few years ago. I really really enjoyed it.
The city was a great mix. Big enough to wow a hick like me, but also felt accommodating, friendly, and cosy.
Great leisurely bicycling next to the river and canals.
All the french makes it feel like I'd traveled much further. I also tried making an effort to speak it, and unlike when visiting France, people actually had the good taste (or angelic patience) to indulge me.
It was somewhat expensive, but not obnoxiously so.
I know tourist experience a place differently than residents, but I can totally get it why it's a desirable place.
I did this with my wife for an anniversary. We're most certainly coming back when hitting a nice round number again.
Problem is salary in Montreal are ridiculously low, and taxes in Quebec are higher than Ontario/British Colombia. Higher taxes should come with the benefit of more services: the health system is clogged and for non-french speaking families, the education system isn't the most friendly.
Indeed. I love Montreal but the health care system in Quebec is absolutely ridiculous. It's not unusual to wait 12-15 hours at the ER. In Vancouver, without an appointment, you have to wait about 10 minutes to see a competent doctor.
- It has some ridiculous language issues. We have the OQLF which goes from business to business to fine anyone not adhering to the French language laws. We once got fined for having the accent the wrong way in our signage, and again for having the wrong verb conjugation in our tagline.
- Dumbfounding Bureaucratic issues. Once when I went to University, I was able to prove to the Provincial Gov, that I lived in Quebec, but the same documents were not accepted by the Federal Gov to prove that I lived in Canada. Meaning I could prove that I lived in Quebec, but not that I lived in Canada.
Also, as soon as my friend's company who does most of her business to the States got to a certain amount of employees, they had their agents come in to switch out all of the keyboards and software into French, and advised to make internal emails communications in French as well.
>A spokesman for the OQLF said the letter is only for information purposes, and there are no penalties involved. The agency's goal, Jean-Pierre Le Blanc said, is to let business owners know that French-language versions of such promotional stickers exist.
>"This is one of about 300 to 400 letters we sent this month to businesses," said Le Blanc. "It's not an investigation. It's not a complaint. It's an incentive."
I suspect that the keyboard anecdote is inflated.
However, the official work language is French, but that is only because we don't want the majority to become second-class citizens..
what site(s) should I be using to look for jobs in Montreal in software? My background is in mechatronics but a ton of the embedded engineering jobs I've seen require some French language skills.
Is that really accurate? I've heard that the tech sector in Montreal is actually pretty lenient about English, and there's ways startups get around bilingual regulations by mainly catering to American/Anglophone markets, which is a loophole they can use. Have seen a good amount of commentary saying that programmers in Montreal don't need to speak a lick of French for their jobs.
I'm not saying it is impossible, however bilingualism is often required in Montreal. Also, once the startup gets to a certain size(I'm not sure if it is over 30 or 50 employees) they have additional restrictions imposed by the OQLF.
There has been a MASSIVE exodus to Quebec by Vancouver game developers. When the recession hit, it hit game development hard, and tons of companies shuttered, downsized, or disappeared overnight. Due to the stupid generous tax incentives to tech companies in Quebec, a lot of game studios remained open there, and developers followed.
The industry in Vancouver has since recovered, but with long-term stressor's like the housing issue; another jerk of the economic chain might catalyze another exodus.
Part of why Montreal is still reasonably priced is because the French-language barrier to entry keeps a lot of jobseekers out.
The vast majority of Canadians outside of Quebec and the Ottawa region do not speak French. Sure, they all took French in high school, but most wouldn't be able to hold a conversation let alone conduct business in the language. Perhaps in some types of jobs with a lax rules about French proficiency, it would be OK, but you are unlikely to find a job listing in Montreal that doesn't state a requirement or "strong preference" for high-level French communication skills.
The forecast high temps for Montreal this weekend are -5F/-21C and 0F/-18C. The forecast high temps for Vancouver, BC this weekend are 48F/9C and 49F/11C. I suspect this is a bigger contributor to housing prices than "money laundering" -- it's one of the only places in Canada with a reasonable climate.
This is almost certainly one of the issues with Bay area real estate as well. Yes, especially of late it's been driven up a lot by tech. But it also has what many people consider just about a perfect climate (SF admittedly less so than the South Bay)--as well as great access to recreational opportunities.
So what's happening with this general trend? Does it mean some smaller cities have stagnating prices and people are leaving? Or does that mean the money we've given to China for 30 years is finally buying out the world? Or does that mean that everyone is afraid of a bubble and invests since 7 years in land?
Funny, the last two people I know who moved to Hawaii, moved back a year later. I'll have to find out why. But they must have a good reason - this is Iowa, and its currently 16 degrees.
I know people who love it. But it's expensive and it's a long way from anywhere. You either live in a pretty soulless city (Honolulu) or in effectively a beach community of some sort that's often dominated by tourism.
I appreciate why some people are attracted to it but I could easily see it getting old quickly even if living in a condo near a beautiful beach and ocean initially seemed like the perfect life. (OTOH, it's sure better than Florida IMO.)
sure, you can't buy a house in Vancouver anymore on a normal salary, but nothing prevents you from living in Surrey, there are plenty of towers going up around the skytrain at Surrey central and King George where you can get an apartment for less than 200k
Yes, it's not Vancouver city, and yes, it's not a house, however via skytrain you can be downtown in a little over 40 minutes and get work done on your laptop in the meantime.
You don't need a house to survive, it is nice, yes, but many many many millions of people live and bring up families in apartments in Europe, so it is definitely doable.
Of course it's annoying to think that 12 years ago you could get a nice house in kits for 400k, or a 1000+ sqf condo downtown for 200k, but what can you do, same deal as buying a lottery ticket or joining a startup that makes it vs one that doesn't. The mountains and nature and weather are available whether you live in vancouver or in one of the suburbs
Metro Vancouver is over 2m people, Surrey is the largest city in the metro area actually, even if Vancouver proper becomes a "haven for the rich" there's plenty of other areas where one can live, the problem is that a lot of tech companies can't seem to see beyond "gastown is trendy" or "let's go to yaletown" or "downtown is where it's at", when they could easily set up in other skytrain-served area and attract more folks that don't like the commute downtown.
It is true, what you could do 10-15 years ago, buy a house within 30 minutes of downtown on a normal salary is not possible anymore (just like it wasn't possible back then to do that for a house in Point Grey) but it is still quite possible to live here, given the amount of immigration that the area is still getting.
Townhouses and condos in Surrey or Langley are still very affordable, the commute is annoying, but from what I hear from friends in the valley it's not like traffic there is that great either, at least up here you can sit on the skytrain and get things done or read a book rather than be stuck in traffic and have no alternatives because there's no decent public transit.
This sort of thing is true broadly. It's a bit more complicated in California because the South Bay is also very popular and very expensive, but the trendy areas of many downtowns have, over a relatively short period, become very popular with, among others, a certain young & educated demographic that really has turned them into luxury goods.
This has arguably long been the case in some places like Manhattan. Going back decades, living in a crappy tiny apartment in Manhattan rather than, heaven forbid, Queens was a thing for recent graduates. But, at the same time, tech was generally moving out of metropolitan Boston and the computer companies were mostly out on the 128 and 495 corridors.
That 495 tech belt thing was because office park space was so cheap and having 75,000 sqft was required back during the Sun and Digital days. No one really chose to live out there after graduating for college, and if they did move out there it was either reluctantly for a shorter commute or because employees were further on in life (e.g. 30-somethings then would consider suburbia ideal; in my late 20s, early 30s now very few people want to live outside of major cities, opt for public transportation over having cars, etc). Now Central Square is gentrified enough to the point where a heroin junkie won't rob you at at 9PM, and at least amongst my friends, the young & educated (both in the sciences and the liberal arts) either chose to stay in the city post-college (or move out to a comparable city).
>No one really chose to live out there after graduating for college
Sure they did. I knew relatively few people who chose to live in Boston/Cambridge after graduation in the 80s. Yes, some of this was because of the commute to their jobs in Metro-West. But I knew lots of people (including myself) who never seriously considered living in the city post-graduation.
As you say, places like Kendall and Central Square weren't exactly desirable locales. Both the state of much of Boston/Cambridge (and even Somerville) and the general attitude toward urban living among certain demographics has obviously shifted.
The Bay Area has been really bad about building, but some of the huge explosions in housing, for example the big towers going up in Redwood City, might finally help alleviate a bit of pressure.
Of course, that won't help the folks who don't want to own a car and do want to live in SF and be part of the urban scene but there are probably a lot more opportunities for adding housing south of SF--where most of the tech employment is anyway.
Well, it won't help folks who want to live in SF, of course, but it's right on the Caltrain line. I would definitely say you could get by in downtown RWC and commute to SF if you desire without a car.
I wonder how much of this and similar cases are based on low interests. You can't keep your money in the bank because you won't get any interests and at the same time leveraging your money and buying housing is cheaper. So maybe the solution to housing prices is significantly higher interest rates?
The issue described is not unique to Vancouver, it's a worldwide phenomenon, lots of desirable locations across the globe are facing the same (from Auckland to London to Sydney to Zurich), even in my hometown in Montevideo, Uruguay, houses are going for ridiculous prices.
A good measure on whether housing is overvalued (IMO) is how many salaries it takes to buy a house. A good salaries to house ratio was something like 4 yearly salaries, it's currently over 10 for England, with some places going to 20 yearly salaries for a house:
As someone who doesn't own any property, I really hope the housing bubble explodes. OTOH there are people who have gotten very wealthy just by inheriting and holding property, who must dread the same scenario, but where can they safely store their value? As mentioned, interest rates are very low or negative.
As someone who just moved from Vancouver to the Bay Area, it's obvious the issue isn't housing. It's income. My apartment in trendy yaletown was $2350/month for a very nice 2 bed, 2 bath place within 10 mins of anything in downtown. Try finding something even remotely as nice around Silicon Valley.
The issue we should be tackling is the low wages seen in the area. The same developer who could make $100k USD in the valley makes $60k CAD in Vancouver.
A lot of fresh grads (from UBC) in Vancouver are living around Kitsilano where you can get a one bedroom place for <$1000/month. Right now I live in a two bedroom flat in the heart of Kits where I'm paying $825 and my flatmate $725.
Previously to that in Vancouver I lived in the heart of Yaletown in a 550sqft studio costing about $1300/month, and started living there on a salary of about $62k.
I've never had financial struggles living in Vancouver with salaries ranging from $42-85k, and have generally had enough disposable income to afford to travel quite a bit, ski at Whistler every weekend, and eat out and go out regularly.
That said, it's totally a renter's market. It's unaffordable for me to buy anything that I'd want to live in for the longer term, unless I go to Surrey or somewhere else in greater Vancouver, which would completely take away or hinder a lot of the benefits I see to living in Vancouver.
The tech salaries are absurdly low. The tech CEOs who pay poor wages and are complaining about their inability to retain talent are the same ones blaming real estate.
Select BC and enter in the typical income for an experienced developer in Vancouver which is 75k. Your take home salary is $59,000 plus you aren't offered any options usually just straight pay. This doesn't include all the other deductions such as EI and CPP.
Now convert CAD to USD and you're a professional experienced developer making $42,000 USD per year, in one of the highest cost cities on earth.
According to that calculator my taxes would be less in Ontario, Canada than California. In reality they aren't because I do married filing jointly and my wife has no income. But were I a single person it seems that it's not true that the taxes are higher there. In fact I'd be paying $5,000 less in tax in Ontario than in California (assuming wages were the same).
I don't know if EI and CPP would add up to $5,000, but certainly it would be much less if you throw Health Insurance into the the calculation.
Don't forget to factor in health care. In BC, standard care that would be the bargain basement cost would likely cost you < $1500 a year. Better care not much more than $2500 tops.
I don't really remember paying for health care separately in Ontario (where I'm from originally) anyway... At least there was an option for it but it was more like "In case you become disabled and can't work" or something like that
Ding ding ding. We have a winner. While I've never ever considered moving to Vancouver, I get recruiter emails several times a month for companies in Vancouver looking for Senior programmers to move there and only offering 80k to 110k CAD at the most. That is not nearly enough money to live in Vancouver. Enough to exist but not enough to live.
The problem as I understand it is that a ton of Vancouver's housing is occupied by children of mega rich people from Asia (mostly China) who are rich enough to not care what rent costs which drives rent up for everyone else. There's such a huge l mismatch between housing costs and salaries in Vancouver.
Yes, Amazon and Microsoft HQ are both in the Seattle area. Google has 2 locations here in Fremont and Kirkland. $200K+ for senior engineers sounds about right from people I've known who went to those companies.
Housing is getting expensive, but you can still buy a small 3br for about $400K in my neighborhood just south of Bellevue, so saving $100K does sound plausible.
Those GlassDoor salaries are cash. Stock and bonus add another 50-100%. My anecdotal experience with Vancouver is that some employers will throw you 15%, on a good year.
Microsoft pays a bit less, but also employs ~30,000 people in the area.
I know a company that pays fresh-grad $70k-$75k base salary with 10-15% bonus almost guaranteed base on company performance (there's a calculation behind it but the bonus amount is part of your package).
Microsoft, Amazon, starting salary was 85-90k to 100k+ 2-3 years ago for 2 years - 5/7 years of experience.
Salesforce Intermediate/borderline Senior SDET (SDET typically make less than SDE) starts from 100k base with a bunch of plus plus that can boost their income to 120k-140k.
OpenDNS lurking well above $100k as well for intermediate developer.
Mogo.ca pays their front-end dev $100k base and this is a small-medium size company.
It's not the norm but thanks to US-based companies, salary is moving up and up.
Unfortunately, Vancouver housing is being driven by international currencies. A low Canadian dollar makes houses in Vancouver a bargain for outsiders and even more unaffordable for anyone earning Canadian dollars.
Vancouver salaries seem exceptionally low. I live in the middle of nowhere USA, and devs start out at from school over $60k USD, and I live on an acre in a 3 bed 3 bath, 6 minutes from downtown and 4 minutes from work. At $2350/month my house would have been paid off in 5 years.
I'm curious if dev salaries in Canada aren't competitive with the US due to more immigration. When I recently visited a large tech company in Canada, I was struck by how much of the team was from everywhere but US and Canada.
My theory is it seems like lots of people want to live in Vancouver, which makes salaries and housing much more competitive. Whereas where I live, people have to be enticed to move here.
Chicken and egg. Partially because of low/competitive salaries in Canada, all of the Canadians are in the US on TN visas, leaving the Canadian tech industry staffed with non-citizens.
San Francisco housing is expensive BECAUSE of the incomes. Vancouver housing is expensive DESPITE the incomes. It's more of a housing issue than an income one. If incomes were higher, rents would only go up as well.
I don't see why we have to separate the two. It sounds like Vancouver faces both increasingly high rent and abnormally low salary for tech jobs (although I recognize that we might not expect Silicon Valley level pay).
Alternatively, SF/the US have extremely better salaries for tech jobs. I don't think this is a problem unique to Canada (but presumably its much worse because of easier access to visas).
I would argue the opposite, SF is expensive in spite of the incomes (consider across the board instead of just programmers).
I'm willing to bet if you were to map the relative rate of increase of income vs. property values over time that you would see that property values are increasing at a much higher rate than income.
I earn what could be considered a good salary, there's less than zero chance in hell that I could afford property in Marin today short of winning the lottery or massive liquidity event.
The problem there is the >90% of people in Vancouver who aren't in high paying tech fields. It's pretty difficult to say "just triple their wages and they'll afford houses no problem."
The real issue is property owners know someone will eventually come along and pay whatever they're asking. If wages were to dramatically increase, they'd never stop and think, "Yeah, I think I'll cap rent at $3000/month because I'm a nice guy." They'll gladly take $4000 if they can and never settle for less once they hit that point. Instead of considering lowering rents, they'll ask why you just don't get paid more.
"Eventually" Looked at three houses a couple of weekends ago, all sold by Monday. Two were unlivable, one nice, but way over budget, all out in the burbs.
Those salaries are low and that's a problem, but a nice 2 bed place in SF 10 min from downtown is what - $5000-7000/mo? The rent relative to income seem similar/worse in SF?
I agree with your point in genera but in my experience as a developer who works in Vancouver, but has also worked in SF and NY, the salaries are about the same in number if not in currency. The CAD has dropped 30% in a couple of years though which does mean we effectively are getting less.
I think Vancouver actually pays tech workers pretty well because there is a high demand, a few big companies and lots of smaller innovative ones.
Vancouver doesn't have the typical jobs that pay for $1m houses and yachts though. Opportunities in finance and corporate HQ positions are minuscule compared to big US cities and Toronto.
I agree with your point in genera but in my experience as a developer who works in Vancouver, but has also worked in SF and NY, the salaries are about the same in number if not in currency. The CAD has dropped 30% in a couple of years though which does mean we effectively are getting less.
I think Vancouver actually pays tech workers pretty well because there is a high demand, a few big companies and lots of smaller innovative ones.
Vancouver doesn't have the typical jobs that pay for $1m houses and yachts though. Opportunities in finance and corporate HQ positions are minuscule compared to big US cities and Toronto.
Agreed - the last job offer I got was for 95k CAD and they would not budge higher.
Currently working remotely for about 115k CAD with a number of other perks.
I moved from Dublin, Ireland to Vancouver. Dublin rents are very high - probably as bad as Vancouver. The cost of living here is slightly lower though.
I can't help but to quote the full song Modern Man from Arcade Fire's album The Suburbs -- which basically was an entire album chronicling this sort of issue in San Francisco.
So I wait my turn, I'm a modern man
And the people behind me, they can't understand
Makes me feel like
Makes me feel like
So I wait in line, I'm a modern man
And the people behind me, they can't understand
Makes me feel like
Something don't feel right
Like a record that's skipping
I'm a modern man
And the clock keeps ticking
I'm a modern man
Makes me feel like
Makes me feel like
In my dream I was almost there
Then they pulled me aside and said you're going nowhere
They say we are the chosen few
But we waste it
And that's why we're still waiting
On a number from the modern man
Maybe when you're older you will understand
Why you don't feel right
Why you can't sleep at night now
In line for a number but you don't understand
Like a modern man
In line for a number but you don't understand
Like a modern man
Oh I had a dream I was dreaming
And I feel I'm losing the feeling
Makes me feel like
Like something don't feel right
I erase the number of the modern man
Want to break the mirror of the modern man
Makes me feel like
Makes me feel like
In my dream I was almost there
Then they pulled me aside and said you're going nowhere
I know we are the chosen few
But we waste it
And that's why we're still waiting
In line for a number but you don't understand
Like a modern man
In line for a number but you don't understand
Like a modern man
If it's alright
Then how come you can't sleep at night?
In line for a number but you don't understand
Like a modern man
I'm a modern man
I'm a modern man
I'm a modern man
I'm a modern man
In a Law of Rents sort of way, I can't help but to think that these phenomena are self indictments. If land prices are driven by those who can extract the most value from them, and the result is that wealthy people land-grab property that even remains vacant in some cases, or otherwise is a living space for a twenty-something working in finance, law, or medicine, who will eventually move away and be replaced by some other twenty-something in finance, law, or medicine, this seems to say a lot more about failures on the part of the wealthy members of older generations to innovate. If the best a use of that land is dormancy, sitting like gold in a vault, instead of being a place where a working class father inspires a child or where a mother teaches her son or where an artist, like what David Byrne did in the Talking Heads days in New York, transforms a space into a freeing creative studio ... isn't this embarrassing to them (the wealthy older generations)? It's basically an admission that, with the huge wealth endowment and peaceful world they were handed by their parents' generation, they managed to squander it to the point where the best use of land, the most inventive thing they can do with their money, is ... nothing. You've got two options: pour your money into consumer variation bullshit startups, or park it into assets like real estate that deprive younger generations of opportunity. It seems that wealth and a half century of the position of passively dominating in Western-led proxy wars has stripped away any sense of civic duty, or even basic shame at their failure to use capital to do anything.
> It's basically an admission that, with the huge wealth endowment and peaceful world they were handed by their parents' generation, they managed to squander it to the point where the best use of land, the most inventive thing they can do with their money, is ... nothing
THIS!
I know it's considered bad form to chime in to just to agree, but upvoting didn't seem enough in this case
Those "consumer variation bullshit startups" are providing a lot of value to people. It's easy to forget how much less fun day-to-day life was even ten years ago.
I think the main reasons people want to park their money in property in expensive cities are some combination of 1. uncertainty/flight to safety 2. thinking prices will go up, perhaps due to undersupply, perhaps due to genuine value to be produced in the cities 3. for some wealthy foreign investors, an asset that's not at risk of being seized by a corrupt government.
The wealthy are certainly revealing their uncertainty. I'm not at all convinced this is worse than the time when the wealthy had absolute confidence in their grand plans for improving the lot of the unwashed masses.
> Those "consumer variation bullshit startups" are providing a lot of value to people. It's easy to forget how much less fun day-to-day life was even ten years ago.
> 3. for some wealthy foreign investors, an asset that's not at risk of being seized by a corrupt government.
I think it's far more often the opposite; wealthy Russian oligarchs and corrupt CCP members trying to dodge economic sanctions and Xi Jinping's corruption crackdown by stashing their cash and children safely away from their home countries.
Back in the mid/late 90s as Hong Kong was returning to China, the spike in prices started. I recall Condos in Kits for $200k or so, new build later in the 90s was still sub $300k. The victorians around there were still reasonable as well.
In a few short years it went nutty and prices spiked and they've only been going up since.
Those retiring age sold their places in Van, moved to the Okanagan and prices there spiked as well.
Weather is maybe part of it, setting and scenery certainly are too. Easy access to the Pacific Rim is also part of it.
Yeah, investors are all around in Bay area too. They are making the real estate market crazy. I have witnessed more than 15 offers on ordinary properties in South Bay, and well, they are selling far more than the listed price. All these investors pay all-cash, money gifted from other side of the globe. It doesn't matter where you work, how much is your salary - you can't beat these investors.
For very real reasons, it's different in Vancouver than in the Bay Area, which some of the comments touch on.
Not that you're wrong -- we bought in the bay area. Our offer was the best of 13, and narrowly beat out an all-cash offer. Of course, you have to have the right seller to be willing to "risk" selling it to normal people who have to borrow to buy, vs the sure thing of an all cash offer.
Guy across the street bid on tons of properties before buying. I think they had the best of 34 (!) offers. RWC.
Meh... article is pushed by special interest groups. Their concerns could be addressed very quickly by raising their employees salaries. Especially since vast majority of companies sell services to the US, and get more CADs than before with the current exchange rate.
The Vancouver economy is not 100% tech, there are many, many businesses (logistics, banking, retail, etc.) that have no exports to the US. Can I ask where you are getting your data?
Thats true, but did you read the article though? It addresses tech industry in several paragraphs at the very beginning. The older tech industries might be CAD-orientied, but any new startup aspires to be global and charges in USD.
It seems like many major cities of the world are experiencing this problem, and no city has been able to come up with a good solution. It always leads to displacement and newspaper articles about displacement, but no real solutions.
Here are a couple of solutions:
1. Build really tall. Hasn't worked out all that great in Hong Kong, though.
2. Rent control. This is often unfair and inflates price of non-rent controlled apartments.
3. Tax the living crap out of property speculation. Not sure if this has been tried anywhere, and I'm sure it would be unpopular among many middle class home owners as well. I'm still rooting for Georgism.
4. Accept that it's a lost cause and move on to the next underdog city that will stay un-gentrified for the next 10 years.
Singapore has been able to solve it to a certain extend. 90%+ of land is owned by the government and leased/purchased back to its residents at an affordable rate. This generates revenue the government can re-invest into the economy. It also reduces the impact of a small group of rent seekers siphoning billions out of the local economy.
Singapore has a pretty good solution for this sort of thing. Socialize Housing (https://en.wikipedia.org/wiki/Housing_and_Development_Board), and then drop 10s of thousands of new units onto the market continuously, subsidize citizen ownership (with further subsidies if you live close to your parents), and further, create a culture of constantly wiping out the older (20-30+ year) apartment blocks that were lower density, and replacing them with taller, higher density buildings. (https://en.wikipedia.org/wiki/Selective_En_bloc_Redevelopmen... )
Pricing has stabilized, and, even is dropping a little bit.
That requires the government to acknowledge there is a problem and come up with a clear strategy to solve the problem.
The BC Provincial Government is working very hard to ignore it as a problem, where they won't even commission studies to generate data on how bad the problem is (or isn't). The federal government has also signaled their distancing from the Vancouver housing issue.
Also, the real problem is foreign ownership. Canada has some of the loosest foreign ownership laws in the world, and provincial/federal governments do not punish foreign ownership with taxes or anything of the like. That means if you are making a lot of money in a corrupt country (China/Saudi Arabia), the Vancouver housing market is a great insurance policy.
The result is you have entire neighbourhoods with no available properties, but are virtually empty (Coal Harbour), and new buildings are built small and shoddy (meant for investment, not livability).
My wife and I make over 100k per year combined, and we will absolutely be leaving the city when we start a family. It all stems from the fact that the local government is willfully ignoring what can be compared to a cancer. It'll only get worse.
What evidence is there that foreign ownership is a major problem? I've heard plenty of anecdotes, but no actual data. I do know that Vancouver real estate agents are milking the "yellow peril" for all it's worth. "Buy now before China owns all of Vancouver!".
Suffice to say, Canadians are doing what American's did in the early 2000's. They are going into a crazy amount of debt to buy housing, which is only pushing prices up even higher. Some of the stats make Canada look even worse than the US did at it's peak[1].
Unfortunately, the provincial/foreign governments refuse to even study the problem. So all we get is anecdotes and investigatory journalism[1], which do not make for good data points.
I heard from a real estate agent in Vancouver that 52% of real estate is owned by foreign investors, mainly buyers from Hong Kong.
They leave the buildings empty. One building was flooded because the fire sprinklers went off and there was no one living there to spot and report the problem.
Ian Young, who writes the Hongkouver blog for the South China Morning Post, said this in a recent interview with Vancouver Magazine:
> We’ve got peer-reviewed academic data from David Ley at UBC, who found what he called ‘an unusually decisive link’ between immigration and property prices in Vancouver, and this is going back over 25 years. We had Markus Moos and Andrejs Skaburskis who did another peer-reviewed piece of academic research that found that prices in Vancouver had become decoupled from local incomes by virtue of the fact that the home buying behavior of many recent immigrants was not tied to their local income. That cuts directly to the issue of foreign money.[1]
A quick google for those authors will turn up their studies.
Those studies are seriously flawed imo as their methodology is to filter on non-anglicized Chinese names and use that as a proxy for foreign money. That would describe a lot of people that aren't recent immigrants, like me.
If anything, those studies show that ethinic-Chinese people are more predisposed to buying a house than renting, even when renting is much cheaper.
seriously flawed is an overstatement; there have been two studies done so far and while the researchers acknowledge the limitations of the method, in aggregate it is considered mostly sound by their peers.
But I agree - we should have something a bit more conclusive than 'Chinese names'. But the whole point is that the current provincial government is actively hostile to requiring real estate agents to collect this information. So last names are all we have.
What evidence is there that foreign ownership is a major problem? I've heard plenty of anecdotes, but no actual data. I do know that Vancouver real estate agents are milking the "yellow peril" for all it's worth. "Buy now before China owns all of Vancouver!".
It's pretty easy to find them. Google 'Andy Yan'; he's an economist at UBC who did the most recent study.
Suffice to say, Canadians are doing what American's did in the early 2000's. They are going into a crazy amount of debt to buy housing, which is only pushing prices up even higher.
Vancouverites are going into unsustainable debt, but at this point mostly for condos, which remain expensive but affordable. The detached house market is long past being affected by CHMC policy and borrowing rules; not even doctors and lawyers can afford the $5-6 million dollar homes that are such a big part of the market here, not even with leverage.
This is part of what I try to tell people when they say that the Vancouver housing market is a 'bubble' - it isn't a bubble because it isn't being driven by leverage; it's being driven by regulatory differences in Canada and China; China has a punishing inheritance tax, and Canada has the most lax rules in the OECD for importing money and buying real estate. There simply is no 'bubble' here to burst. That's not to say that the situation isn't extremely unstable, but without leverage this simply isn't a 'bubble'.
China has a punishing inheritance tax, really? China has no inheritance tax, it also lacks a property tax or even a capital gains tax. Libertarians would love it here if it weren't for the police state...
Why Chinese buy abroad: to park money outside of China, to participate in real estate markets leased screwed up than their own (say what you want about Vancouver, it isn't anywhere near as bad as Beijing Shanghai Shenzhen), and to have an exit plan when they fall out of favor or things go to hell in China.
My point stands; Canadian interest rates could double and Vancouver house prices wouldn't budge; some Canadians would have their homes foreclosed on, but there's so much money in the market from China that homes here would still be unaffordable to people working in Canada and paying Canadian taxes.
This just isn't a 'bubble'.
China has no inheritance tax, it also lacks a property tax or even a capital gains tax. Libertarians would love it here if it weren't for the police state...
Nice! This sounds like a pretty good way to game the system; earn all your money in a tax-less free-wheeling libertarian wonderland, cash out, then bring your millions to a place with no wealth tax! The new place will have lots of social services and lots of burdensome income taxes for the locals to pay for them, but you made your money and you don't have income to tax! Win!
That is quite old. Anyways, taxes are not a problem in China yet.
Anyways we've seen is before with the Japanese in the 80s, and it eventually all crashed down, leaving the Vancouver/Seattle/California real estate markets in a rut for more than a decade! I'm guessing when the Chinese economy comes back down to earth, the exact same thing is going to happen again.
Japan had 120 million people in the 80's. China is currently at 1.35 billion. There were a million new millionaires created in China in 2014. I'm not sure that the Japan situation compares to China very well.
The way things are going right now, it seems to be playing out exactly the same, just the scale is much larger given the increase in population (million of new millionaires were created in Japan also, of course, with a much smaller population base than China!).
I think the point is that if housing prices in Vancouver peak around $2M, the dust settles, and housing prices fall and equilibriate down to $1M, living in Vancouver doesn't really get any more realistic.
I too am skeptical of the Japan comparison. China is both a very densely populated but also an extremely populous country and I think its just natural that a lot of Chinese will want to leave for less-densely populated places. Just the number of people involved makes this a problem unlike any other we've seen in history; how many tens of millions of Chinese millionaires now have the option of picking up and leaving their homeland? The scale of the migration is larger but the size of west coast cities isn't; certainly not by a factor of 10.
It depends on how much is speculation vs. how much it is Chinese from the mainland actually moving to Vancouver. How many Chinese can actually emigrate to Vancouver, or why would they go there when they can go elsewhere? I'm old enough to have seen Vancouver real estate go through boom and bust before, and I'm just a Seattleite.
Anyways, we've all heard "its different this time" before, and it never is.
I have a lot of love for Vancouver, but the strange insistence on low salaries in an expensive housing market, with serious traffic and physical natural barriers to transportation, is a real problem.
I know of several developers, whose advice and preference is to move out of the city (closer to skiing/biking/etc) and work remotely for a US company.
There is plenty of evidence of the foreign property issue, and the willful ignorance of the government. Besides everything else posted, here's an academic case study:
"1. Build really tall. Hasn't worked out all that great in Hong Kong, though."
What do you mean when you say it hasn't worked out great in Hong Kong? Is it because prices are still high in a lot of neighborhoods there? I'd say the build-really-tall strategy has worked out quite well in HK. There is a range of affordability in close proximity with good transit, and lots of parks and open space. It's a remarkably livable city.
The fundamental problem is that real estate in major cities has become a scarce luxury good covered by the wealthy. Restrictions on building - rent control and aggressive property taxes basically fall into this category - only make things worse.
The only way to make Vancouver, SF, and anywhere else affordable is to radically increase supply relative to demand. In practice things aren't that simple.
The best bet for someone looking to live and raise a family is probably your fourth option. There are a lot of really nice cities out there.
They certainly are in plenty of neighborhoods - especially compared to other cities in China. The thing is that despite the tall buildings there isn't actually that much supply on HK island itself because it's so tiny. Still, I think there's a much bigger range relative to overall quality of urban life compared to, say, SF. And things get a lot more affordable across the harbor in Kowloon and in the New Territories. Though, even there it's probably not cheap compared to most cities in mainland China.
I'm far from an expert on this though, and maybe I'm off base here. I've just spent time there and looked at real estate and been struck by how not impossible it was to find reasonable places at reasonable prices compared to the Bay Area.
The price are through the roof, and you have to compare it to Median salary. The price per Square Feet / or Square Meter is expensive.
Of coz if you are working in Hong Kong as a wealthy individual you would have no problem enjoying everything HK has to offer. This is the same as any other place in the world.
You have to also include the City and State difference. Vancouver has a problem with Median Salary to Housing price at 10, and Sydney is at 12.
Hong Kong is 19. Which means if HK property prices dropped by 50% it will still be around the same level as Vancouver.......
I think the conclusions drawn in this post are outdated.
The german real estate market was undervalued for a very long time. In the last 10 years there has been a very rapid (100%+) rent increase in the cities and a massive property rush from foreign investors in the in major cities (especially Berlin). Another factor to consider: seeing that 1.5million+ "refugees" came to Germany in 2015 alone, these increases will become even sharper over the next few years.
> Rent control. This is often unfair and inflates price of non-rent controlled apartments.
There's the rub. Virtually all rent control schemes in North America only apply to a subset of properties (usually the shitty ones), which isn't fair and often doesn't work. Meanwhile, Germany has a long history of successful rent control, perhaps not coincidentally because it applies universally.
I have witnessed and seen the day to day effects of a city (albeit, a very small one) that did find a solution to this problem: Aspen, Colorado.
It's a tremendous outlier - both in population (8000 full time residents) and in pricing (even more expensive free market housing than any of the big markets that are typically discussed).
The solution was to build city-subsidized "resident housing" that actual residents (as opposed to seasonal) enter a lottery to win, which gives them the ability to purchase the property (again, subsidized) and become property owners inside Aspen. Although the property itself can appreciate with the market, the owner can only realize 2-4% appreciation per year - the rest goes back to the city.
It works. There is a legitimate, affordable path to actual home ownership for regular folks in Aspen, and it takes those people out of the "affordable" rental pool which softens the pricing pressure for people who aren't staying forever or who haven't won a lottery share yet.
They already have this lottery system in various cities in the SF Bay Area. I'm sure it helps some, but it hasn't made a big dent in the housing problem.
Whenever I look at hong kong on google earth, I see a lot of empty green space that tall buildings could be built on. I also see an area in the north that isn't really dense, large open sports areas and green areas on the south island. HK the territory seems to be much larger than HK the city and it smells suspicious that prices are high but land is not being used.
And don't say, we need parks! I'm fairly certain that large amounts of that parkland is unused because you need to hike in pretty deep to enjoy it. And highrises can be built on mountains.
>And don't say, we need parks! I'm fairly certain that large amounts of that parkland is unused because you need to hike in pretty deep to enjoy it.
So we should monitor how far people hike into these parks? And if the number of people in a remote part of a city park falls below X number of people a day for Y days we should just bulldoze that part of the park for buildings?
It's one of the most populous, unaffordable and dense cities in the world, where people live in metal cage bunk beds because it is so unaffordable. On top of that, the majority of the land in HK is park land.
I think a few acres of park land can be developed to release pressure on the housing market so people are not forced by circumstance to live in such situations. And by developing on some park land, the deep park land will start to get some utilization.
Go look at singapore for example, they use a significantly larger amount of their land as actual city space.
Politicians can put as many fancy well-intended laws in place as they want. All these laws will have only have minimal effects on the underlying supply and demand market forces. In fact, chances are that those laws will even increase the overall average rent due to the added bureaucratic overhead und regulations that are indirectly passed on to the tenants.
I think it's a symptom of something else: the hyper-centralization of relevance and cultural center of gravity in only a few places.
When I was younger (1990s), I don't remember it mattering so much where you were located. I've spoken to older people and they concur: they've all said that when they were young being in, say, Indianapolis or Toledo was not a big deal.
Today, at least in the USA, there's a strong sense that you're nobody unless you are in one of about eight big coastal cities. Nothing happens anywhere else.
I'm talking about perception here. You can argue that this isn't really true, and that you can do anything most anywhere, but the cultural perception is that you're nobody and can't do anything unless you are in NYC, SF, LA, etc.
I'm a startup founder and have been told by several people on several occasions that we are doomed because we are not in the Bay Area. I'm in SoCal but apparently if we're not in SF or its Southern suburbs it's impossible to succeed as a tech company. Obviously I don't believe this, but the meme is strong. If enough people take this stuff seriously, it's going to contribute to a hell of a property bubble in SF/SV.
I still don't understand why this is the case, especially since the Internet was supposed to have the opposite effect. By making information globally available and communication easy, the Internet was supposed to flatten the world and make place less relevant. Instead I've noticed a strong and obvious trend in the opposite direction since circa 2000.
I can only comment on the USA, but what I see elsewhere seems to support this being a global thing. London has gone totally insane for example. I wonder if the Internet is actually having a paradoxical centralizing effect here, allowing larger cities to broadcast their cultural "signal" and then have that signal amplified enough by network effects to make them appear exponentially more and more influential. This in turn drives a feedback loop in which talent and ambition is drawn increasingly to these cities, etc., and the rest of the country is hollowed out.
It's actually part of an even larger trend. Since 2000 everything seems to have gone increasingly power law: wealth distribution, geographic relevance, education, etc.
As far as I can see this is exactly what is happening. More powerful computers and communications are amplifying the power of individuals, and as a result making relationships even more important. And cities have always been the places of innovation and relationships. Just even more so now.
But it's not just cities. Philadelphia and Baltimore and Atlanta are big cities, but they aren't the right cities. It's a small number of them. It's not just urbanism, but also brand.
True, but as someone from Europe, I can tell you the branding has always been the case. NYC, Boston, SF, and LA, were always the outstanding cities relative to those you mention above. We rarely heard of, rarely saw in movies and TV, many other cities outside of those few.
I'm not saying you're wrong -- far from it -- but the brand has been there for longer than the phenomenon we're discussing here. Perhaps the tech has just made it even more pronounced.
I think it may just depend on what it is you're trying to accomplish with your career. Take Atlanta since you bring it up. Atlanta already is the number one place to be globally for a career in Information Security which is a significant chunk of the tech community even though it's not nearly as flashy as social-web. Atlanta is also becomming a nexus for email-related startups (it's really not just Mailchimp there are several major ones here when you look at volume of email sent). Turner is headquartered in Atlanta, as is Coca Cola, Home Depot, CNN, and more.
Atlanta has become a really excellent city for graphic artists and design firms because companies such as Cartoon Network pull artists in from the global market, and then these artists stick around and end up engaging with the local startup community. In other words Atlanta is becoming a designer hub (and the city's close-enough proximity to Disney helps boost this effect)
In addition it's also a nexus for medical startups probably due to the fact that the CDC is here.
Those are good points and I don't disagree at all, but I was talking about perception more than reality. There's still this immense perception that if you're not in the top five you don't exist, and I think that's one of the factors driving real estate hyperinflation in those places.
The other funny phenomenon I've noted is people assuming we are in SV and asking whether we are "down in the valley" or "up in the city." I say "we're waaaaaay down in the valley... like eight hours South." I bet companies in Atlanta will give an address in one of Atlanta's burbs and get asked "where's that? is that in the East bay?"
Maybe the whole thing is just real estate fund or bank propaganda.
Yes, but there are others to choose from, depending on sector. Fintech startups, for example, can be based in Chicago rather than NYC, biotech has several hubs that are outside your list, etc.
I agree with you that this a phenomenon that is taking place and yes when I was younger I don't remember it being so severe. Even mentioning you're live in a 'second tier city' makes some people think, well this persons not serious. Aside, I live in London UK and people are paying insane rents for pure garbage tear down style disgusting properties.
I agree that this is the status quo re: startups, but the high water mark was probably a couple of years ago, with the caveats that there have long been 'SV' startups that have or keep all or most of their engineering in an offshore location, say in Israel, with only the corporate office and upper management / sales moving to SV after VC investment.
However, now we're seeing two things happen:
* Several cities technically in 'flyover country' (eg. Boulder CO, Austin TX, etc.) have already built brands/ecosystems as startup hubs, and more cities are trying to copy their example rather than 'become the next SV'.
* Some fully geographically distributed companies (eg. Automattic, Buffer) are gaining visibility as success stories, and although they are still the exception, I expect more new startups to try and copy them, if only because Bay Area COL is now so ridiculously high.
Areas of Tokyo like Setagaya have population densities in excess of 14000 residents per square kilometer. There are few tall buildings; it is largely single-family homes.
Vancouver proper only has a density around 5000 residents per square kilometer. There's plenty of land to infill with housing without building tall.
What's wrong with #3? Maybe it wouldn't have been popular 10 years ago, but after seeing the disastrous effects of a housing bubble, I for one would be perfectly happy to see property speculation taxed heavily. For instance, I think a simple solution would be to eliminate property taxes altogether for primary residences, but levy significant property taxes on investment properties and second/third homes. You'd have to design this bit well, though, because you don't want to kill the rental market: a lot of people aren't in a position to buy their own home. Perhaps a tax break for a first rental house, but jack up the rates if you own more than one rental house.
This is me. I left Vancouver for Toronto 5 years ago. What is not mentioned (that I saw) is that salaries in Vancouver are also much lower than Toronto for the same job. Montreal is even cheaper than Toronto and is probably more fun (if you are bilingual)
I am from NB (Anglo). So I have very rusty French. I am sure it would come back if I used it. Montreal is a great city. My salary doubled for the same industry (programmer with CS) going from Van to TO. Vancouver is beautiful if you like playing in the mountains. I miss the snowboarding and hiking very much. But I was almost homeless I was so poor out there.
Nothing has changed in the last 20 years. House prices are still high, and salaries are still low. There is no real industry in Vancouver except tourism.
At least the rents are somewhat affordable, tho. The gap between house prices vs rent prices is immense, compared to a place like San Francisco. You can rent a 2 bedroom in the West End for ~$1500.
"Direct spending on Film & TV production in British Columbia (BC) totalled more than $2 billion in 2014 making Vancouver the 3rd largest production centre in North America"
For all these 'bubble' cities (Vancouver, S.F., Seattle, London, ...), I wonder if the bubble ever pops? Are there examples of the prices/avg. income getting so far out of whack that things collapse?
It blows my mind that the internety tech industry, of all industries, is so heavily concentrated in a handful of physical locations around the world. There's this vicious cycle where companies think they need to be in one of these places to attract the best talent, and employees think they need to live in one of these places to have the best career options.
Sometimes when I'm at Red Door in SOMA, overhearing twenty different conversations about startups, I want to scream "We have this thing, it's called the internet, it makes it super easy to communicate from anywhere! Let's go! Let's disperse across the globe!"
I mean, I get it. Face-to-face in-person communication is powerful for building trust, and the valley runs on trust, but still.
It's easy to complain about zoning, tax policies, NIMBY-ism, lack of investment in public transit, etc. etc. But the reality is that you could turn all sorts of dials to increase the supply of available housing over the course of years and decades and you'd still have a situation where not everyone could live in an affordable condo/apartment in whatever $TRENDY_CITY.
I suspect that the current concentration of certain sectors of the tech industry in the Bay area is just unsustainable. There's an upper limit to how much companies can afford to pay for employees relative to other areas, how much employees can afford to pay for housing, and how long commutes they'll tolerate.
For sure. And the reality also is that people can take job offers and/or move to new cities a lot faster than builders can build housing.
I don't think building more is a panacea that would suddenly mean two-bedrooms in Cow Hollow rent for $1,000 in 2017. That said, restricting market rate construction certainly only makes things worse. And building more would help at least a little.
Vancouver and cities like it became popular because of the critical mass of fun, interesting, creative, hard working young people who moved there and created communities. Once priced out, they will just go elsewhere. Other young people will follow and recreate the same communities with a lower price tag. Depending on local land use restrictions, some amount of gentrification then follows. In other words, this is a problem that takes care of itself, to some extent. Visit Austin or Nashville today and you will see this in action.
San Francisco is an outlier given the extremely dense concentration of high paying jobs which drove housing into orbit. This makes it much ''stickier''. However, this entire model is dependent upon the public markets giving tech companies sky high valuations, which could change. Already I see many of the more proactive venture firms scouring outside of SF for deal flow, particularly in these gentrifying second tier cities like Austin, Nashville, Minneapolis, Kansas City, etc.
Does Vancouver have rent control? I thought rent control was one of the big causes of the SF housing crisis... or so people say. For me, at least, it's the only way I can afford to live in the city!
Would that actually solve the problem? Is there anywhere in America where steel frame construction + concrete walls + elevators is affordable to regular people? Is there even one example of this happening in the real world?
I haven't found any examples, except in already hyper-wealthy neighborhoods, or in 40+ yr old buildings in cities that became significantly less desirable, due to very high crime/poverty/etc. (Detroit, parts of Chicago, etc)
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> (From the Slate.com article you linked to) What should be happening in Silicon Valley is an enormous construction boom. There should be oodles of blue-collar jobs knocking down suburban-style single-family detached homes and replacing them with attached townhouses. Right by Caltrain stations, there should be huge apartment towers going up. Some people might get dispaced out of the individual house they live in, but generally should be able to afford to stay in the area
Is that a thing that has ever actually happened -- even just once? It sounds like a false narrative.
In the real world, the creation of the Highrise adds more units (increases supply) but does not reduce demand -- because the presence of the new building makes the neighborhood more attractive, so demand rises even more than the supply was increased, driving prices even higher. If a hypothetical high rise has 20 units, the act of constructing it increases demand by 40 units (20 of which the building absorbs, 20 of which are dumped back into the already-high-demand neighborhood.
I'm in the "low cost of living" Midwest, and even here this occurs. A developer pays $150k for a single family 4bed home. Tears it down, and builds 3 condos on the site, each condo lists for $250k - $300k and is only 2bed each. The previous occupants are guaranteed to be displaced -- even if they could downsize their space needs, they can't afford to double their housing costs.
Where is this hypothetical place where these brand new condos cost equal-or-less than the old single family house that was just torn down?
For more dramatic numbers, including low prices and a booming population for many years, you should look at Houston, Texas, Hero Of Housing Capitalism.
> rents dropped this quarter in all but South Lake Union, with the average decline hitting $59 a month. Further, when all of these submarkets are considered, the average vacancy rate increase was nearly a full percentage point.
2015 new construction was huge, the biggest since the late eighties/early nineties, and construction for the next couple years, based on filings, looks like it's going to continue that way. So it's likely that apartment prices will continue fall or hold still.
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I mean, look at the Bay Area. They command some of the highest rents in the country, and many tech-sector workers are able to "get by" because of higher salaries from their employers. Of course, if you're not in the tech sector, you're forced to live in more affordable outskirts, like East Bay.
In NYC, they have fantastic transit, so if you don't live in Manhattan, you can still get to work relatively easily. That infrastructure investment has helped NYC maintain its desirability.
Meanwhile, Toronto has a similar problem to Vancouver, except we're building tons of condos. As long as you adjust your outlook to realize that you may only be able to afford a condominium (to buy or rent), you can make it work. Otherwise, you can move to the suburbs, but our transit is garbage, so good luck with that.
Of course, I've simplified my points and glossed over the nuances. But I think the solution is really: 1) Higher density housing (i.e. high-rise residential) 2) Much better transit 3) Options for affordable rent-subsidized housing in these developments
If you do those things, I think you'll make it easier for millenials to choose to stay, and still encourage a diverse community that's not made up of just high-income tech or finance workers. Places like Hong Kong, Tokyo, NYC, Singapore, and many more seem to be thriving cities, and I think those are the factors they have in common.
What changed is the respect the builders have for the people buying and living in their buildings. 5-10 years ago, condos were a bit more rare, so a construction company had to try really hard to make their condo appealing. They worked slower and the architecture was much more livable. Spacious units, sensible parking and elevators, and catchy amenities like pools and fitness rooms.
Now, they pump out condos like a sweatshop. Instead of 8 units on a floor, there are now 12. Instead of a pool, you get a gym, and instead of a fitness room, you get a yoga studio. Elevators that serve more than 30 floors are too expensive, so those 50+ storey condos need 2 elevators; one to take you from 1-30, and another to take you to from 30-50. Every single new condo in the last 5 years is in litigation with the developer due to issues with the building. Contractors like plumbers and electricians know the game now too, so every bill from a contractor will be $999 (regardless of work done) because anything over $1000 requires board approval. Without a strong property management team, I expect half of the condos will be bankrupt within a decade.
If you want to buy a condo, buy one in a building that is more than 10 years old. They will have sorted out the engineering problems by then and their budgets will be inline.
1) Mailboxes are in the basement, so you can't check on your way in.
2) Each unit having a loud spaceship/heat pump instead of one central one. Heat pump is leased, not owned by the unit, so you're paying $45/month in perpetuity. Maintenance not included.
3) Submetering of electricity, where a quarter to half of your bill is in the delivery charge from a random power company (times x units of the building, instead of one for the whole building and incl. it in condo fees)
4) New condo board isn't allowed to fix/improve various promised things until the builder fixes it. Builder waits for it to time-out for 3 years and then the Board has to arbitrate/mediate it with the Builder. Meanwhile, condo board can't touch it.
5) Builders signing exclusive contracts with telecoms, so you can't get service from anyone else.
6) Locks not keyed right, so residents' keys can open mechanical rooms/rooftop access
7) Gym on the second floor, so residents below feel like they're living in a bowling alley
In Manhattan, subways run all night to the different boros, Metro-north, the LIRR, PATH, NJ transit etc. run through the night.
People say NYC is expensive, and living on the upper east side or west village can be expensive. But plenty of safe, cheaper places are a 20 minute train ride from Manhattan, and even more are a 30 minute train ride (and so on). You don't get options like that in the Bay Area.
You can rent a 100 sqm for only 1000 euros per month!!!!
You can't get 40 sqm for that same amount in Paris.
Here in Boston I'm paying 3700 euros for (poorly maintained) 90 sqm, of course split with five people. Maybe it is time to consider a stint in Berlin.
Are there any resources you would recommend to learn more about the city, and the tech scene?
I'm guessing the equivalent of their hipsters got wise to it and drove up prices a la the gentrification you saw (compare the between the dirty-grimy NYC of the "Taxi Driver" 1970s vs the clean power-tie NYC of the 1980s bond-trading years, or the early 2000s Williamsburg where the rent was somewhat reasonable vs 2010 where anything on the L costed literally 3 times as much because every white kid with a fixie had his parents pay his $2600 rent, etc. $800/mo on a split isn't too bad for Boston if you're anywhere close to a decent spot on the T, considering the supply/demand (it's arguably the biggest college region in the US - between Cambridge, Boston and BC in Newton it's probably the densest student:non-student ratio in the US). Berlin had that vibrant feeling that's hard to explain but yeah the tech scene was (and hopefully still is) spectacular, especially re: the hardware hacking scene when I was there and it's certainly worth a visit.
Edit: http://ccc.de/ In math if you solve something major, odds are you'll wait till that years AMS Symposium to present; if you crack the PS3, CCC is where fail0verflow went to present. (Don't write them off because of their l33t-name, these guys aren't script kiddies -- these hacks are worthy of PhD theses if you see the detail of reverse engineering they go into.).
(Maybe I shouldn't say so. Keep the secret to those who know.)
http://www.thelocal.de/20150707/politicians-struggle-to-keep...
And while rents are still cheap compared to other large western cities, they went (and are going) through about the same curve as these more expensive cities - it simply started lower here.
Maybe you have an European or U.S. citizenship, but they're harder towards South Americans. Also, software development salaries weren't something to write home about last time I checked (that was some a long time ago admittedly).
Edit: According to Glassdoor, Berlin Software Engineer Salary: €48000 (average)
Sydney Software Engineer Salary: $80000 (average)
My grandfather was German-born and they didn't grant the citizeship to him, and I remember the ridiculous requirements he faced trying to get it (and he was more German than most actual Germans, a Fischer Reuter Spangemberg and more German surnames all the way down)
http://www.spiegel.de/international/germany/skilled-immigran...
"The paperwork is nightmarishly complex and requires a wealth of information, with endless pages and extra documents. Sometimes translations are required, sometimes not. In fact, she no longer sends the papers off without consulting an expert. Anders works as the human resources manager for Adidas. She is looking for skilled workers in Europe, the Middle East and Africa. These days, even a company like Adidas rarely finds new employees in Germany, especially IT experts and designers."
I also know a lot of Israelis who got German citizenships via their grandparents, but there might be special rules that make it easier for victims of the nazis (and their descendants) or people that fled the country.
Either way the salary is probably never a reason to move to Germany (I don't think wages are higher than in any other western country), I meant more like that it's not a reason NOT to move in that particular example.
Visas are pretty easy to come by in Berlin - google "EU Blue Card".
I can't remember where I heard but the city controls the rental rates. Don't want to pay more for a property than you can recoup. And you don't want to leave it unoccupied less you come back to find it squatted; and they have rights as well.
Because it is so highly regulated its not a great investment.
Out here in the burbs, it's a different story. A development just down the road from me suffered very badly in the downturn, with houses losing as much as 50% of their value. Some of those owners will never be above water on their houses. I'm very glad I chose not to move from my townhouse into a single family home a decade ago, as prices soared, even though I really wanted a place with a mad scientist basement workroom. And as my friends retire, most are moving to warmer and/or cheaper places.
As far as I can tell, they simply don't. I don't think there is any city that "deals with it", or even tries to, in any way.
Every city I can think of that has value in living in, is experiencing explosive bubble-like growth in them. Even the supposedly "cheap" or "low cost of living" cities are undergoing this process.
I think most cities secretly want this to happen, since it leads to higher property taxes and drives out members of their community they consider less desirable.
The elephant in the room is why this happened. Everyone talks about "foreign speculation" but in fact most of it is not speculation at all. In mainland China, Vancouver is widely viewed as a nice, quiet small city, good for students and the elderly. It's not a place for "real" work. So they buy homes there to live in part-time. It is quite normal to have the mother and child live in Vancouver while the father continues to work overseas. They pay almost no Canadian tax as they have no Canadian income. With their child in school, the parents can eventually claim permanent resident status thanks to the family reunification program and they can expect to retire in Canada. It's a big win for them and they see nothing wrong with it.
To summarize: introducing vast income inequality has distorted the Vancouver housing market and drastically altered the demographics of the city, making it unaffordable for the people who actually work and pay taxes there.
[1] http://www.theglobeandmail.com/life/home-and-garden/real-est...
To me, there seems to be a pretty obvious public policy response. Institute a very high property tax, which is abated on some kind of curve according to the amount of time the owner or tenants spend living in a property, with no tax being due if the property is legitimately occupied for more than, say, ten months.
It might not solve the problem entirely, but at least you would reduce the effect of a diminution of housing supply that is driven by these kinds of absentee owners, and that must be driving up rents, at least.
https://southfloridaforbeginners.wordpress.com/2012/04/04/th...
In California, the exemption is a measly $7000. Which is essentially nothing, given home prices in the Bay Area. What they need to do is increase that number 10-20X or make it a percentage of the home's value. This would greatly help solve the problem of foreign "investors" buying up all the housing, leaving it vacant, and essentially just treating homes like bars of gold in a safe.
And don't even get me started on Prop 13, which is essentially mechanism to transfer wealth from younger, newer residents to older residents.
Yes, this kills real estate as a long term investment. No, that is a good thing, we should collectively much rather see capital invested in the stock market rather than being thrown into precious metals or property as a store of value.
All that takes is the minimum effort to police the property you own to insure nobody is squatting. What I'm saying is that unconditionally whether or not someone is illegally occupying your property you only have a fixed amount of time to make use of it before it effectively becomes unclaimed land again.
I suspect several other European countries have similar rights.
"Land Registry will decide if your application is valid and will let the property owner know. The owner has 65 days to object - your application will usually be automatically rejected if they do."
So basically you'll only get to stay if the property is effectively abandoned.
Super high property tax when I'm not there? Simple, employ a cleaner on some minimal wage and let them stay there when I'm not in town. When I'm in town, put them up in a hotel. I'll probably still save money on the property tax and I can claim to be a caring employer, helping with employment in town. The city council are evil job destroyers by sticking me with huge taxes.
Scotland implements a 'second home' variant of their 'council tax' [a weird name for property tax]. Depending on area, it's a locally chosen multiple of the standard tax. But that's based on whether people declare another property and there's a lot of overhead in policing it. I doubt if it actually raises any extra net income.
But what if your empty property is actually from a relative who recently died and the estate is being finalized? Does that get hit too?
It always sounds simple to just slap extra taxes on rich people (who always happen to be defined as someone other than yourself), but that often leads to unfairness to decidedly non-rich people.
Rich people always find a way round these things - they pay lawyers and accountants to make sure they can. No public policy will ever fix that.
It's a highly regressive tax, and utterly negligible when considering prime real estate in areas like London.
In a macro economical sense Canada already profited from getting foreign $ invested in buying those properties anyway, time to make Vancouver livable.
Doesn't that kind of help the problem though? Because now someone who would have to rent an expensive apartment is now basically living rent-free in a home. If enough people did this, it would help alleviate the issue.
I agree with your point though, and know people who do this. They are "caretakers" who basically live rent-free to make sure the place doesn't fall apart. The occupancy idea sounds good, but it seems like a logistical, administrative pain to enforce.
The fact that Florida has no state income tax is an even bigger incentive to actually reside in Florida if you have a lot of passive income coming your way.
We have always had areas where the cost of housing was too high but the reactionary idea of taxing it to death is in effect the idea of that some property rights are important but others are not.
If any such idea was pushed then be sure that protection is applied to citizens of the country involved. Even this is dangerous as it tells foreigners that their money is welcome but their rights are subject to the whims of the times.
The real solution is, build more places to live. What is preventing the building of affordable housing? Find that and fix that. The response is far more proper and rewarding than trying to force someone out of their property because you think they don't deserve to own it if they don't live in a set amount of time
If you take the net the fisherman wants to use and string it up as a hammock, you're going to eat fewer fish later. If you take the blacksmith's tongs and use them to crack walnuts, you're not going to get that handful of nails that you wanted to build your house.
Property rights alleviate the tragedy of the commons, by taking resources with multiple possible uses out of the commons and dedicating them to uses other than just the one with the highest immediate value.
It should be obvious that you can't plant a field on the same land footprint as the foundation of your house. You can't build a road over it at the same time that it's under an apartment building. Property rights are part of our system for resolving the conflicts behind multiple competing exclusive uses for any particular thing.
They are not absolutely essential to democracy, but they are the best solution we have yet tried for resource allocation in a specialized economy, and democracies tend to fare better when there is enough prosperity to spread around to everyone.
If you put gold in a vault, it retains its value. But it cannot be used productively. If you instead loan the same gold out, you can charge interest, and some of the value generated by the gold performing its productive function as money will diffuse back to you via trade.
As a whole, the entire economy would prefer that all tools be put to productive use 24 hours a day. But the individual Nash equilibrium strategy is to selectively employ or withhold the use of those tools for greater personal benefit to the tool owner.
In the government's role as cartel enforcer, it would be in the interest of the whole cartel for the enforcer to levy a vacancy tax on investment properties. That reduces the personal benefit of idling the productive tool, but the enforcer then also has the burden of returning that value to the economy in a productive way.
It's not like God handed down the capitalist model of property rights carved on stone tablets...that model is just one stage in the continuous historical evolution of the concept of property rights.
This punishes newcomers and rewards staying in the same property, just like California Prop 13. Have a kid and need a new place with more space? Prepare to pay punishing property taxes for that luxury. You grew up in the area and it's time to move out? Enjoy your tax! Moving from the countryside for better employment opportunities? Tax please!
Because of the strong disincentive to move, there's now going to be fewer units on the market than would otherwise be expected. House prices go up, not down, and the moving tax is likely to be regressive.
>It might not solve the problem entirely, but at least you would reduce the effect of a diminution of housing supply that is driven by these kinds of absentee owners, and that must be driving up rents, at least.
In this case it will exacerbate it, just like Prop 13. It's really a moving tax disguised as a property tax.
There is, however, a tax that will punish absentee owners but also not create distortions: a land value tax.
It's similar to a normal property tax, except it's on the value of the land only, not land and improvements or improvements only. A single family home on a particular lot is taxed the same as a skyscraper or an empty lot sitting on that same lot.
This punishes land speculators and NIMBY types, cannot be passed on in rent (normally taxes decrease the supply somewhat, so some of the tax can be passed on, but land is fixed in value and a tax cannot reduce its supply), and does not punish building like a standard property tax does. It allows cities to capture value from infrastructure improvements, such as running a new transit line.
The practical concerns are similar to a standard property tax: how do we do assessments? The great thing about it is that land is easier to compare than buildings are.
Can you explain why this would be a moving tax?
Obvious, property taxes only apply to the fraction of the year that you own a place. Are you worried about the overlapping period where you have the house on the market but haven't sold it yet?
I suppose that would be an issue, but I assume for most people, that's a relatively small fraction of time. It's not like there aren't already lots of other expenses associated with moving.
>Obvious, property taxes only apply to the fraction of the year that you own a place. Are you worried about the overlapping period where you have the house on the market but haven't sold it yet?
The proposal was to create a property tax that phases out once the owner has lived there for X period of time. Naturally, every time you sell and move you then reset this clock, so you'd pay the property tax only if you keep moving. The most monetarily rational strategy is to buy and hold forever if at all possible.
In short, the only way to trigger this tax is to move.
There's a lot of this, yes. And the suburbs aren't necessarily very suburban: I live in a 30 floor condo tower in Burnaby, and within 2 block radius there's a dozen similar towers and twenty more 30-60 floor towers in various stages of zoning hearings (8) / building approval (7) / digging big holes (2) / towers going up (3).
There are two major phenomena at play in Vancouver:
1. Across Metro Vancouver, the supply of land for single family detached houses is very constrained; this is pushing prices of detached houses up dramatically.
2. The City of Vancouver proper is very hostile to development, due to a toxic combination of NIMBYism, height restrictions to maintain "view corridors" of the nearby mountains, and social activists who think that building more housing will somehow make housing less affordable.
But if you're willing to live in a condo and you don't mind living a 20 minute train ride away from downtown, the cost of housing is far more reasonable than hysterical media reports would have you believe; and unlike detached houses, prices of condos have barely kept up with inflation over the past decade.
Vancouver was plagued by "leaky condos" in the 1980s and early 1990s, but that's over now: This happened due to a rapid expansion of condo construction using building designs suited for a drier climate. There have been no signs of problems in newer buildings.
Stata corporations are normally supposed to have depreciation reports prepared in order to identify upcoming costs; unfortunately these can be waived with a vote of unit holders, and most do. The best remedy here is to not buy a unit which doesn't have a recent depreciation report.
no space to start a family
In terms of $ per unit floor area, condos are cheaper than detached houses. Sure, you don't get a lawn... but you get access to lots of other amenities. I'm not convinced that raising kids in a condo is as hard as people think.
"suggesting the typical wealthy foreign family buying Vancouver real estate pays little or no income or capital gains tax"
http://www.theglobeandmail.com/report-on-business/economy/ho...
Seattle has a bunch of similar articles about "outsiders" supposedly driving up housing costs. Which is absurd: steel frame construction and elevators are very old technologies that allow humans to build just about as many housing units as can be desired.
However, condos come with their own issues as well. There has been a building boom in Toronto that has it owns issues.. http://www.cbc.ca/news/canada/toronto/fears-that-shoddy-toro....
I think urban planning is more complicated than simply increasing supply.
http://www.spur.org/sites/default/files/wysiwyg/asking.price...
Real estate as an export is .. well, it's a response to circumstances, I suppose, but is it really sustainable? After all, you can't just make more land with the property "within 1km of Central Park".
What happens when the majority of a city is owned by foreign landlords? Do you think that might distort its politics?
Foreign property investment is very bad for the long term prospects of a city.
[1] http://www.theguardian.com/housing-network/2016/feb/12/tory-...
A single bedroom, that when built as the spare room for kids to play in or a visitor, costs £400/month.
Myself and several friends have left London. Perhaps I've been replaced by a 21 year old British graduate, but this seems less likely than 10 years ago.
https://www.gumtree.com/single-room-flatshare/london
Most incomers are young people, but not all are graduates — many come from Eastern and Southern Europe and work low-skill jobs. I put "British", but probably meant someone one would expect to live in London for a long time. I got to know a few construction workers from Poland and Romania, and none of them had any intention to stay — they were in London to make money, and several had wives/children 'at home'.
This can make a functioning city, but it's a change from London of 20 years ago, when it would be artists and musicians taking some of these cheap houses and I think fewer people were there to make some money and leave.
A good part of why I left is because it wasn't as interesting as it used to be. I wondered if I was getting old, but then, "of the 430 music venues that traded in London between 2007 and 2015, only 245 are still open" [1]. I certainly noticed that there were fewer gigs I wanted to see, and they'd moved from Friday/Saturday to weekdays.
The other part: I was working for a scientific charity, with charitable pay. I wasn't saving much money, even with living in a shared house, so decided I needed a new job. I wanted to continue writing software for science, so there weren't all that many jobs that interested me in London.
I now live in Copenhagen.
[1] http://www.theguardian.com/cities/2015/sep/09/the-slow-death...
There's always been people coming to London for a few years to make money. Ten years ago maybe it was the Australians coming over here to work in bars and restaurants. I think construction workers would always have been moving around (certainly my dad did); there are probably more of them now than ten years ago but more construction is hardly a bad thing. I certainly don't think there are fewer skilled jobs for graduates than there were: the City has been adding more and more jobs and sprawling down to London Bridge, tech has boomed in Shoreditch, Bloomsbury and elsewhere, there's that huge new medical campus effort around King's Cross. The BBC has sadly been driven away for political reasons, but I don't think there's ever been a better time to be a graduate moving to London.
Where is cheap has changed. Music, indie theatre and groundbreaking art have been pushed further out, to Camden and Highbury and Shoreditch and Hackney and Brixton and Clapham. Soho is halfway to being Knightsbridge. But that's always been the way of these things.
> "of the 430 music venues that traded in London between 2007 and 2015, only 245 are still open"
I have no idea what the real numbers are, but I can tell that's a line designed to mislead, to make you think there has been a decline in the number of music venues without actually giving any evidence for it. How long did those 430 last, on average? What proportion of the music venues that traded between 1999 and 2007 were open in 2007? Indeed, how many music venues were open in 2007? What's the betting it was less than 245?
> The other part: I was working for a scientific charity, with charitable pay. I wasn't saving much money, even with living in a shared house, so decided I needed a new job. I wanted to continue writing software for science, so there weren't all that many jobs that interested me in London.
You pays your money, you takes your choice. Some jobs and some people are surely getting priced out of London. But the city as a whole is doing very well thank you.
We can build units quickly and relatively cheaply (certainly the cost of building has fallen over time, certainly on a like-for-like quality basis. As you say, steel frame buildings with lift access can create housing units quickly and cheaply.
The issue is restrictions on supply caused by government policies and nimbly-ism, plus a general desire to shelter parts of the community from market forces.
It wouldn't matter how many Chinese investors wanted to buy apartments if supply kept up with demand.
one way to address it, and I know this is crazy guys just bear with me, is that these tech leaders could start paying more money. No hope to afford a condo at 75k a year? how about at 150?
Vancouver is simply not that much better than Seattle that I would go back. The salary difference is just too high, especially with the favorable tax situation in washington and the lousy dollar.
It's odd: it's like the state understands that banks are bastards.
Montreal has some issues with organised crime but nothing compared to the organised crime of banking / money laundering through land. I don't have to pay some gangster $1MM for a shack.
Leave the boomers to their trinkets kids. Walk away. They need your labour, the rest is just paper.
I'm going to reuse that! I wish this kind of thinking about economy is more main stream.
Other people don't seem to really care about weather extremes or scenery, etc. I have no insight into these real estate investors dumping money into property, sure if they aren't living there, there's some other factors involved.
That said, having grown up in Vancouver, I'd consider Montreal - seeing the sun in the fall/winter is a really nice concept I've gotten used to. I've gotten used to harsh cold of the east coast, but I never got used to the dreary vast grayness even though I spent most of my childhood in it.
The city was a great mix. Big enough to wow a hick like me, but also felt accommodating, friendly, and cosy.
Great leisurely bicycling next to the river and canals.
All the french makes it feel like I'd traveled much further. I also tried making an effort to speak it, and unlike when visiting France, people actually had the good taste (or angelic patience) to indulge me.
It was somewhat expensive, but not obnoxiously so.
I know tourist experience a place differently than residents, but I can totally get it why it's a desirable place.
I did this with my wife for an anniversary. We're most certainly coming back when hitting a nice round number again.
Daycare services in the province are absurdly cheap compared to anywhere else in the country.
- Dumbfounding Bureaucratic issues. Once when I went to University, I was able to prove to the Provincial Gov, that I lived in Quebec, but the same documents were not accepted by the Federal Gov to prove that I lived in Canada. Meaning I could prove that I lived in Quebec, but not that I lived in Canada.
- And it was named the most corrupt Province in Canada. http://www.macleans.ca/news/canada/the-most-corrupt-province...
http://www.cbc.ca/news/canada/montreal/burgundy-lion-oqlf-1....
Also, as soon as my friend's company who does most of her business to the States got to a certain amount of employees, they had their agents come in to switch out all of the keyboards and software into French, and advised to make internal emails communications in French as well.
>A spokesman for the OQLF said the letter is only for information purposes, and there are no penalties involved. The agency's goal, Jean-Pierre Le Blanc said, is to let business owners know that French-language versions of such promotional stickers exist.
>"This is one of about 300 to 400 letters we sent this month to businesses," said Le Blanc. "It's not an investigation. It's not a complaint. It's an incentive."
I suspect that the keyboard anecdote is inflated.
However, the official work language is French, but that is only because we don't want the majority to become second-class citizens..
You know what, I'm getting emotional on the Internet.
I'm going to stop arguing here. It's not productive, and there's nothing to prove.
In any cases, feel free to message me in French if you need practice.
The industry in Vancouver has since recovered, but with long-term stressor's like the housing issue; another jerk of the economic chain might catalyze another exodus.
The vast majority of Canadians outside of Quebec and the Ottawa region do not speak French. Sure, they all took French in high school, but most wouldn't be able to hold a conversation let alone conduct business in the language. Perhaps in some types of jobs with a lax rules about French proficiency, it would be OK, but you are unlikely to find a job listing in Montreal that doesn't state a requirement or "strong preference" for high-level French communication skills.
We love it here, but we have accepted that it is not where we will be able to put roots down.
My partner and I work remotely, we'll enjoy our time here then buy a home elsewhere...
Like maybe Hawaii. :)
I appreciate why some people are attracted to it but I could easily see it getting old quickly even if living in a condo near a beautiful beach and ocean initially seemed like the perfect life. (OTOH, it's sure better than Florida IMO.)
The other, a chef in a touristy restaurant. Made something new and different every week. He's another story - no idea why he'd give that up!
Yes, it's not Vancouver city, and yes, it's not a house, however via skytrain you can be downtown in a little over 40 minutes and get work done on your laptop in the meantime.
You don't need a house to survive, it is nice, yes, but many many many millions of people live and bring up families in apartments in Europe, so it is definitely doable.
Of course it's annoying to think that 12 years ago you could get a nice house in kits for 400k, or a 1000+ sqf condo downtown for 200k, but what can you do, same deal as buying a lottery ticket or joining a startup that makes it vs one that doesn't. The mountains and nature and weather are available whether you live in vancouver or in one of the suburbs
Metro Vancouver is over 2m people, Surrey is the largest city in the metro area actually, even if Vancouver proper becomes a "haven for the rich" there's plenty of other areas where one can live, the problem is that a lot of tech companies can't seem to see beyond "gastown is trendy" or "let's go to yaletown" or "downtown is where it's at", when they could easily set up in other skytrain-served area and attract more folks that don't like the commute downtown.
It is true, what you could do 10-15 years ago, buy a house within 30 minutes of downtown on a normal salary is not possible anymore (just like it wasn't possible back then to do that for a house in Point Grey) but it is still quite possible to live here, given the amount of immigration that the area is still getting.
Townhouses and condos in Surrey or Langley are still very affordable, the commute is annoying, but from what I hear from friends in the valley it's not like traffic there is that great either, at least up here you can sit on the skytrain and get things done or read a book rather than be stuck in traffic and have no alternatives because there's no decent public transit.
This has arguably long been the case in some places like Manhattan. Going back decades, living in a crappy tiny apartment in Manhattan rather than, heaven forbid, Queens was a thing for recent graduates. But, at the same time, tech was generally moving out of metropolitan Boston and the computer companies were mostly out on the 128 and 495 corridors.
Sure they did. I knew relatively few people who chose to live in Boston/Cambridge after graduation in the 80s. Yes, some of this was because of the commute to their jobs in Metro-West. But I knew lots of people (including myself) who never seriously considered living in the city post-graduation.
As you say, places like Kendall and Central Square weren't exactly desirable locales. Both the state of much of Boston/Cambridge (and even Somerville) and the general attitude toward urban living among certain demographics has obviously shifted.
This is largely due to politics. If you were a speculator considering building a rental apartment building, you face:
1) Rent control. (Those cities and counties that don't have it are all considering it.)
2) Requirements that you allocate a percentage of your units as limited to "low income housing", with those units becoming permanently constrained
3) permit costs, neighborhood opposition, and other city-specific barriers
4) high material prices and construction costs (e.g. earthquake and flood codes)
5) high labor costs
https://positivemoney.org/issues/house-prices/
The issue described is not unique to Vancouver, it's a worldwide phenomenon, lots of desirable locations across the globe are facing the same (from Auckland to London to Sydney to Zurich), even in my hometown in Montevideo, Uruguay, houses are going for ridiculous prices.
A good measure on whether housing is overvalued (IMO) is how many salaries it takes to buy a house. A good salaries to house ratio was something like 4 yearly salaries, it's currently over 10 for England, with some places going to 20 yearly salaries for a house:
http://www.theguardian.com/money/2015/aug/06/average-house-p...
As someone who doesn't own any property, I really hope the housing bubble explodes. OTOH there are people who have gotten very wealthy just by inheriting and holding property, who must dread the same scenario, but where can they safely store their value? As mentioned, interest rates are very low or negative.
Where were you 5-7 years ago?
The issue we should be tackling is the low wages seen in the area. The same developer who could make $100k USD in the valley makes $60k CAD in Vancouver.
No fresh grad ($60k) should live in "trendy" Yaletown district with 2 BR + 2 Bath.
Previously to that in Vancouver I lived in the heart of Yaletown in a 550sqft studio costing about $1300/month, and started living there on a salary of about $62k.
I've never had financial struggles living in Vancouver with salaries ranging from $42-85k, and have generally had enough disposable income to afford to travel quite a bit, ski at Whistler every weekend, and eat out and go out regularly.
That said, it's totally a renter's market. It's unaffordable for me to buy anything that I'd want to live in for the longer term, unless I go to Surrey or somewhere else in greater Vancouver, which would completely take away or hinder a lot of the benefits I see to living in Vancouver.
I estimated I was paying $100 more to live in downtown, but that was almost equivalent to the savings in transit fares.
The tech salaries are absurdly low. The tech CEOs who pay poor wages and are complaining about their inability to retain talent are the same ones blaming real estate.
Select BC and enter in the typical income for an experienced developer in Vancouver which is 75k. Your take home salary is $59,000 plus you aren't offered any options usually just straight pay. This doesn't include all the other deductions such as EI and CPP.
Now convert CAD to USD and you're a professional experienced developer making $42,000 USD per year, in one of the highest cost cities on earth.
I don't know if EI and CPP would add up to $5,000, but certainly it would be much less if you throw Health Insurance into the the calculation.
neat.
Now I just need to find a job paying that amount... oh wait. :/
The taxes are not really higher in BC. I do agree that the cost of living is however a lot higher.
The problem as I understand it is that a ton of Vancouver's housing is occupied by children of mega rich people from Asia (mostly China) who are rich enough to not care what rent costs which drives rent up for everyone else. There's such a huge l mismatch between housing costs and salaries in Vancouver.
But then again 'decent' and 'comfortably' are subjective.
A senior engineer in Seattle can do the same, and save ~100K/year.
Most people would do well to save 20% but even assuming people save 33% then you reckon senior engineers earn over 300k?
If you can 'live well' in the more expensive Vancouver at a 110K CAD salary, you could easily save an extra 100-200K USD by moving to Seattle.
Your figures don't seem to stack up RE Google:
https://www.glassdoor.ca/Salary/Google-Seattle-Salaries-EI_I...
Housing is getting expensive, but you can still buy a small 3br for about $400K in my neighborhood just south of Bellevue, so saving $100K does sound plausible.
Microsoft pays a bit less, but also employs ~30,000 people in the area.
Microsoft and Amazon are hardly an exception in Seattle - now that Boeing is leaving, they are by far the biggest employers in the region.
Microsoft, Amazon, starting salary was 85-90k to 100k+ 2-3 years ago for 2 years - 5/7 years of experience.
Salesforce Intermediate/borderline Senior SDET (SDET typically make less than SDE) starts from 100k base with a bunch of plus plus that can boost their income to 120k-140k.
OpenDNS lurking well above $100k as well for intermediate developer.
Mogo.ca pays their front-end dev $100k base and this is a small-medium size company.
It's not the norm but thanks to US-based companies, salary is moving up and up.
The brain drain is slow but inevitable.
I'm willing to bet if you were to map the relative rate of increase of income vs. property values over time that you would see that property values are increasing at a much higher rate than income.
I earn what could be considered a good salary, there's less than zero chance in hell that I could afford property in Marin today short of winning the lottery or massive liquidity event.
The real issue is property owners know someone will eventually come along and pay whatever they're asking. If wages were to dramatically increase, they'd never stop and think, "Yeah, I think I'll cap rent at $3000/month because I'm a nice guy." They'll gladly take $4000 if they can and never settle for less once they hit that point. Instead of considering lowering rents, they'll ask why you just don't get paid more.
Can you guys all start up a shared google doc and hash this out to figure out which one of you is right and why the others are all wrong?
I think Vancouver actually pays tech workers pretty well because there is a high demand, a few big companies and lots of smaller innovative ones.
Vancouver doesn't have the typical jobs that pay for $1m houses and yachts though. Opportunities in finance and corporate HQ positions are minuscule compared to big US cities and Toronto.
I think Vancouver actually pays tech workers pretty well because there is a high demand, a few big companies and lots of smaller innovative ones.
Vancouver doesn't have the typical jobs that pay for $1m houses and yachts though. Opportunities in finance and corporate HQ positions are minuscule compared to big US cities and Toronto.
Currently working remotely for about 115k CAD with a number of other perks.
I moved from Dublin, Ireland to Vancouver. Dublin rents are very high - probably as bad as Vancouver. The cost of living here is slightly lower though.
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In a Law of Rents sort of way, I can't help but to think that these phenomena are self indictments. If land prices are driven by those who can extract the most value from them, and the result is that wealthy people land-grab property that even remains vacant in some cases, or otherwise is a living space for a twenty-something working in finance, law, or medicine, who will eventually move away and be replaced by some other twenty-something in finance, law, or medicine, this seems to say a lot more about failures on the part of the wealthy members of older generations to innovate. If the best a use of that land is dormancy, sitting like gold in a vault, instead of being a place where a working class father inspires a child or where a mother teaches her son or where an artist, like what David Byrne did in the Talking Heads days in New York, transforms a space into a freeing creative studio ... isn't this embarrassing to them (the wealthy older generations)? It's basically an admission that, with the huge wealth endowment and peaceful world they were handed by their parents' generation, they managed to squander it to the point where the best use of land, the most inventive thing they can do with their money, is ... nothing. You've got two options: pour your money into consumer variation bullshit startups, or park it into assets like real estate that deprive younger generations of opportunity. It seems that wealth and a half century of the position of passively dominating in Western-led proxy wars has stripped away any sense of civic duty, or even basic shame at their failure to use capital to do anything.
THIS!
I know it's considered bad form to chime in to just to agree, but upvoting didn't seem enough in this case
I think the main reasons people want to park their money in property in expensive cities are some combination of 1. uncertainty/flight to safety 2. thinking prices will go up, perhaps due to undersupply, perhaps due to genuine value to be produced in the cities 3. for some wealthy foreign investors, an asset that's not at risk of being seized by a corrupt government.
The wealthy are certainly revealing their uncertainty. I'm not at all convinced this is worse than the time when the wealthy had absolute confidence in their grand plans for improving the lot of the unwashed masses.
I think this is highly questionable.
I think it's far more often the opposite; wealthy Russian oligarchs and corrupt CCP members trying to dodge economic sanctions and Xi Jinping's corruption crackdown by stashing their cash and children safely away from their home countries.
In a few short years it went nutty and prices spiked and they've only been going up since.
Those retiring age sold their places in Van, moved to the Okanagan and prices there spiked as well.
Weather is maybe part of it, setting and scenery certainly are too. Easy access to the Pacific Rim is also part of it.
Not that you're wrong -- we bought in the bay area. Our offer was the best of 13, and narrowly beat out an all-cash offer. Of course, you have to have the right seller to be willing to "risk" selling it to normal people who have to borrow to buy, vs the sure thing of an all cash offer.
Guy across the street bid on tons of properties before buying. I think they had the best of 34 (!) offers. RWC.
If you're interested in working on cool engineering problems in Toronto, e-mail me.
Here are a couple of solutions:
1. Build really tall. Hasn't worked out all that great in Hong Kong, though.
2. Rent control. This is often unfair and inflates price of non-rent controlled apartments.
3. Tax the living crap out of property speculation. Not sure if this has been tried anywhere, and I'm sure it would be unpopular among many middle class home owners as well. I'm still rooting for Georgism.
4. Accept that it's a lost cause and move on to the next underdog city that will stay un-gentrified for the next 10 years.
https://en.wikipedia.org/wiki/Public_housing_in_Singapore
Pricing has stabilized, and, even is dropping a little bit.
The BC Provincial Government is working very hard to ignore it as a problem, where they won't even commission studies to generate data on how bad the problem is (or isn't). The federal government has also signaled their distancing from the Vancouver housing issue.
Also, the real problem is foreign ownership. Canada has some of the loosest foreign ownership laws in the world, and provincial/federal governments do not punish foreign ownership with taxes or anything of the like. That means if you are making a lot of money in a corrupt country (China/Saudi Arabia), the Vancouver housing market is a great insurance policy.
The result is you have entire neighbourhoods with no available properties, but are virtually empty (Coal Harbour), and new buildings are built small and shoddy (meant for investment, not livability).
My wife and I make over 100k per year combined, and we will absolutely be leaving the city when we start a family. It all stems from the fact that the local government is willfully ignoring what can be compared to a cancer. It'll only get worse.
What evidence is there that foreign ownership is a major problem? I've heard plenty of anecdotes, but no actual data. I do know that Vancouver real estate agents are milking the "yellow peril" for all it's worth. "Buy now before China owns all of Vancouver!".
Suffice to say, Canadians are doing what American's did in the early 2000's. They are going into a crazy amount of debt to buy housing, which is only pushing prices up even higher. Some of the stats make Canada look even worse than the US did at it's peak[1].
[1]http://2oqz471sa19h3vbwa53m33yj.wpengine.netdna-cdn.com/wp-c...
http://www.theglobeandmail.com/news/investigations/the-real-...
They leave the buildings empty. One building was flooded because the fire sprinklers went off and there was no one living there to spot and report the problem.
Ian Young, who writes the Hongkouver blog for the South China Morning Post, said this in a recent interview with Vancouver Magazine:
> We’ve got peer-reviewed academic data from David Ley at UBC, who found what he called ‘an unusually decisive link’ between immigration and property prices in Vancouver, and this is going back over 25 years. We had Markus Moos and Andrejs Skaburskis who did another peer-reviewed piece of academic research that found that prices in Vancouver had become decoupled from local incomes by virtue of the fact that the home buying behavior of many recent immigrants was not tied to their local income. That cuts directly to the issue of foreign money.[1]
A quick google for those authors will turn up their studies.
1- http://vanmag.com/city/the-van-mag-qa-ian-young/
If anything, those studies show that ethinic-Chinese people are more predisposed to buying a house than renting, even when renting is much cheaper.
But I agree - we should have something a bit more conclusive than 'Chinese names'. But the whole point is that the current provincial government is actively hostile to requiring real estate agents to collect this information. So last names are all we have.
His data is interesting and adds to the conversation, but is not peer reviewed or an academic study[1].
The studies I refer to above are more rigorous in their approach and thus their results are, imho, more reliable.
http://www.vancourier.com/news/controversial-foreign-ownersh...
It's pretty easy to find them. Google 'Andy Yan'; he's an economist at UBC who did the most recent study.
Suffice to say, Canadians are doing what American's did in the early 2000's. They are going into a crazy amount of debt to buy housing, which is only pushing prices up even higher.
Vancouverites are going into unsustainable debt, but at this point mostly for condos, which remain expensive but affordable. The detached house market is long past being affected by CHMC policy and borrowing rules; not even doctors and lawyers can afford the $5-6 million dollar homes that are such a big part of the market here, not even with leverage.
This is part of what I try to tell people when they say that the Vancouver housing market is a 'bubble' - it isn't a bubble because it isn't being driven by leverage; it's being driven by regulatory differences in Canada and China; China has a punishing inheritance tax, and Canada has the most lax rules in the OECD for importing money and buying real estate. There simply is no 'bubble' here to burst. That's not to say that the situation isn't extremely unstable, but without leverage this simply isn't a 'bubble'.
Why Chinese buy abroad: to park money outside of China, to participate in real estate markets leased screwed up than their own (say what you want about Vancouver, it isn't anywhere near as bad as Beijing Shanghai Shenzhen), and to have an exit plan when they fall out of favor or things go to hell in China.
Sorry; proposed inheritance tax.
http://www.ibtimes.com/chinas-proposed-inheritance-tax-meets...
My point stands; Canadian interest rates could double and Vancouver house prices wouldn't budge; some Canadians would have their homes foreclosed on, but there's so much money in the market from China that homes here would still be unaffordable to people working in Canada and paying Canadian taxes.
This just isn't a 'bubble'.
China has no inheritance tax, it also lacks a property tax or even a capital gains tax. Libertarians would love it here if it weren't for the police state...
Nice! This sounds like a pretty good way to game the system; earn all your money in a tax-less free-wheeling libertarian wonderland, cash out, then bring your millions to a place with no wealth tax! The new place will have lots of social services and lots of burdensome income taxes for the locals to pay for them, but you made your money and you don't have income to tax! Win!
I should figure out how to get in on this.
Anyways we've seen is before with the Japanese in the 80s, and it eventually all crashed down, leaving the Vancouver/Seattle/California real estate markets in a rut for more than a decade! I'm guessing when the Chinese economy comes back down to earth, the exact same thing is going to happen again.
I too am skeptical of the Japan comparison. China is both a very densely populated but also an extremely populous country and I think its just natural that a lot of Chinese will want to leave for less-densely populated places. Just the number of people involved makes this a problem unlike any other we've seen in history; how many tens of millions of Chinese millionaires now have the option of picking up and leaving their homeland? The scale of the migration is larger but the size of west coast cities isn't; certainly not by a factor of 10.
Anyways, we've all heard "its different this time" before, and it never is.
I know of several developers, whose advice and preference is to move out of the city (closer to skiing/biking/etc) and work remotely for a US company.
There is plenty of evidence of the foreign property issue, and the willful ignorance of the government. Besides everything else posted, here's an academic case study:
http://news.nationalpost.com/news/canada/in-a-six-month-peri...
http://www.slideshare.net/ayan604/ownership-patterns-of-sing...
What do you mean when you say it hasn't worked out great in Hong Kong? Is it because prices are still high in a lot of neighborhoods there? I'd say the build-really-tall strategy has worked out quite well in HK. There is a range of affordability in close proximity with good transit, and lots of parks and open space. It's a remarkably livable city.
The fundamental problem is that real estate in major cities has become a scarce luxury good covered by the wealthy. Restrictions on building - rent control and aggressive property taxes basically fall into this category - only make things worse.
The only way to make Vancouver, SF, and anywhere else affordable is to radically increase supply relative to demand. In practice things aren't that simple.
The best bet for someone looking to live and raise a family is probably your fourth option. There are a lot of really nice cities out there.
I'm far from an expert on this though, and maybe I'm off base here. I've just spent time there and looked at real estate and been struck by how not impossible it was to find reasonable places at reasonable prices compared to the Bay Area.
Of coz if you are working in Hong Kong as a wealthy individual you would have no problem enjoying everything HK has to offer. This is the same as any other place in the world.
https://twitter.com/FIVRE604/status/697822416894951424
You have to also include the City and State difference. Vancouver has a problem with Median Salary to Housing price at 10, and Sydney is at 12. Hong Kong is 19. Which means if HK property prices dropped by 50% it will still be around the same level as Vancouver.......
The german real estate market was undervalued for a very long time. In the last 10 years there has been a very rapid (100%+) rent increase in the cities and a massive property rush from foreign investors in the in major cities (especially Berlin). Another factor to consider: seeing that 1.5million+ "refugees" came to Germany in 2015 alone, these increases will become even sharper over the next few years.
There's the rub. Virtually all rent control schemes in North America only apply to a subset of properties (usually the shitty ones), which isn't fair and often doesn't work. Meanwhile, Germany has a long history of successful rent control, perhaps not coincidentally because it applies universally.
It is always and every time a terrible idea. It should never be implemented anywhere, at any time, for any reason.
Price fixing destroys markets and creates a tiny subset of winners at the expense of everyone else.
It's a tremendous outlier - both in population (8000 full time residents) and in pricing (even more expensive free market housing than any of the big markets that are typically discussed).
The solution was to build city-subsidized "resident housing" that actual residents (as opposed to seasonal) enter a lottery to win, which gives them the ability to purchase the property (again, subsidized) and become property owners inside Aspen. Although the property itself can appreciate with the market, the owner can only realize 2-4% appreciation per year - the rest goes back to the city.
It works. There is a legitimate, affordable path to actual home ownership for regular folks in Aspen, and it takes those people out of the "affordable" rental pool which softens the pricing pressure for people who aren't staying forever or who haven't won a lottery share yet.
And don't say, we need parks! I'm fairly certain that large amounts of that parkland is unused because you need to hike in pretty deep to enjoy it. And highrises can be built on mountains.
So we should monitor how far people hike into these parks? And if the number of people in a remote part of a city park falls below X number of people a day for Y days we should just bulldoze that part of the park for buildings?
I think a few acres of park land can be developed to release pressure on the housing market so people are not forced by circumstance to live in such situations. And by developing on some park land, the deep park land will start to get some utilization.
Go look at singapore for example, they use a significantly larger amount of their land as actual city space.
Politicians can put as many fancy well-intended laws in place as they want. All these laws will have only have minimal effects on the underlying supply and demand market forces. In fact, chances are that those laws will even increase the overall average rent due to the added bureaucratic overhead und regulations that are indirectly passed on to the tenants.
When I was younger (1990s), I don't remember it mattering so much where you were located. I've spoken to older people and they concur: they've all said that when they were young being in, say, Indianapolis or Toledo was not a big deal.
Today, at least in the USA, there's a strong sense that you're nobody unless you are in one of about eight big coastal cities. Nothing happens anywhere else.
I'm talking about perception here. You can argue that this isn't really true, and that you can do anything most anywhere, but the cultural perception is that you're nobody and can't do anything unless you are in NYC, SF, LA, etc.
I'm a startup founder and have been told by several people on several occasions that we are doomed because we are not in the Bay Area. I'm in SoCal but apparently if we're not in SF or its Southern suburbs it's impossible to succeed as a tech company. Obviously I don't believe this, but the meme is strong. If enough people take this stuff seriously, it's going to contribute to a hell of a property bubble in SF/SV.
I still don't understand why this is the case, especially since the Internet was supposed to have the opposite effect. By making information globally available and communication easy, the Internet was supposed to flatten the world and make place less relevant. Instead I've noticed a strong and obvious trend in the opposite direction since circa 2000.
I can only comment on the USA, but what I see elsewhere seems to support this being a global thing. London has gone totally insane for example. I wonder if the Internet is actually having a paradoxical centralizing effect here, allowing larger cities to broadcast their cultural "signal" and then have that signal amplified enough by network effects to make them appear exponentially more and more influential. This in turn drives a feedback loop in which talent and ambition is drawn increasingly to these cities, etc., and the rest of the country is hollowed out.
It's actually part of an even larger trend. Since 2000 everything seems to have gone increasingly power law: wealth distribution, geographic relevance, education, etc.
I'm not saying you're wrong -- far from it -- but the brand has been there for longer than the phenomenon we're discussing here. Perhaps the tech has just made it even more pronounced.
Atlanta has become a really excellent city for graphic artists and design firms because companies such as Cartoon Network pull artists in from the global market, and then these artists stick around and end up engaging with the local startup community. In other words Atlanta is becoming a designer hub (and the city's close-enough proximity to Disney helps boost this effect)
In addition it's also a nexus for medical startups probably due to the fact that the CDC is here.
The other funny phenomenon I've noted is people assuming we are in SV and asking whether we are "down in the valley" or "up in the city." I say "we're waaaaaay down in the valley... like eight hours South." I bet companies in Atlanta will give an address in one of Atlanta's burbs and get asked "where's that? is that in the East bay?"
Maybe the whole thing is just real estate fund or bank propaganda.
However, now we're seeing two things happen:
* Several cities technically in 'flyover country' (eg. Boulder CO, Austin TX, etc.) have already built brands/ecosystems as startup hubs, and more cities are trying to copy their example rather than 'become the next SV'.
* Some fully geographically distributed companies (eg. Automattic, Buffer) are gaining visibility as success stories, and although they are still the exception, I expect more new startups to try and copy them, if only because Bay Area COL is now so ridiculously high.
Areas of Tokyo like Setagaya have population densities in excess of 14000 residents per square kilometer. There are few tall buildings; it is largely single-family homes.
Vancouver proper only has a density around 5000 residents per square kilometer. There's plenty of land to infill with housing without building tall.
At least the rents are somewhat affordable, tho. The gap between house prices vs rent prices is immense, compared to a place like San Francisco. You can rent a 2 bedroom in the West End for ~$1500.
http://www.vancouvereconomic.com/film-television/
http://www.economist.com/blogs/dailychart/2011/11/global-hou...
Detroit probably experienced a R.E. bubble in the day...
That said, I'm not predicting that outcome myself -- at this point, I would not want to place any sort of bet on that market.
Everything is still disputed, but Tokyo real estate prices certainly played a part. There was no crash as such, but rather a stagnation.
Sometimes when I'm at Red Door in SOMA, overhearing twenty different conversations about startups, I want to scream "We have this thing, it's called the internet, it makes it super easy to communicate from anywhere! Let's go! Let's disperse across the globe!"
I mean, I get it. Face-to-face in-person communication is powerful for building trust, and the valley runs on trust, but still.
I suspect that the current concentration of certain sectors of the tech industry in the Bay area is just unsustainable. There's an upper limit to how much companies can afford to pay for employees relative to other areas, how much employees can afford to pay for housing, and how long commutes they'll tolerate.
I don't think building more is a panacea that would suddenly mean two-bedrooms in Cow Hollow rent for $1,000 in 2017. That said, restricting market rate construction certainly only makes things worse. And building more would help at least a little.
San Francisco is an outlier given the extremely dense concentration of high paying jobs which drove housing into orbit. This makes it much ''stickier''. However, this entire model is dependent upon the public markets giving tech companies sky high valuations, which could change. Already I see many of the more proactive venture firms scouring outside of SF for deal flow, particularly in these gentrifying second tier cities like Austin, Nashville, Minneapolis, Kansas City, etc.
San Francisco's housing policies drove housing into orbit: http://techcrunch.com/2014/04/14/sf-housing/. There are numerous other discussions of this: http://www.amazon.com/TheRent-Too-Damn-High-Matters-ebook/dp....
We have the technology to build lots of units (steel-frame construction, elevators): http://www.slate.com/blogs/moneybox/2013/05/03/silicon_valle.... "We" just choose not to use them.
I haven't found any examples, except in already hyper-wealthy neighborhoods, or in 40+ yr old buildings in cities that became significantly less desirable, due to very high crime/poverty/etc. (Detroit, parts of Chicago, etc)
---
> (From the Slate.com article you linked to) What should be happening in Silicon Valley is an enormous construction boom. There should be oodles of blue-collar jobs knocking down suburban-style single-family detached homes and replacing them with attached townhouses. Right by Caltrain stations, there should be huge apartment towers going up. Some people might get dispaced out of the individual house they live in, but generally should be able to afford to stay in the area
Is that a thing that has ever actually happened -- even just once? It sounds like a false narrative.
In the real world, the creation of the Highrise adds more units (increases supply) but does not reduce demand -- because the presence of the new building makes the neighborhood more attractive, so demand rises even more than the supply was increased, driving prices even higher. If a hypothetical high rise has 20 units, the act of constructing it increases demand by 40 units (20 of which the building absorbs, 20 of which are dumped back into the already-high-demand neighborhood.
I'm in the "low cost of living" Midwest, and even here this occurs. A developer pays $150k for a single family 4bed home. Tears it down, and builds 3 condos on the site, each condo lists for $250k - $300k and is only 2bed each. The previous occupants are guaranteed to be displaced -- even if they could downsize their space needs, they can't afford to double their housing costs.
Where is this hypothetical place where these brand new condos cost equal-or-less than the old single family house that was just torn down?
For more dramatic numbers, including low prices and a booming population for many years, you should look at Houston, Texas, Hero Of Housing Capitalism.
But that's not true, according to your own article.
From your link: "in the core of Seattle, rents went up 3.9 percent year-over-year in September."
> rents dropped this quarter in all but South Lake Union, with the average decline hitting $59 a month. Further, when all of these submarkets are considered, the average vacancy rate increase was nearly a full percentage point.
2015 new construction was huge, the biggest since the late eighties/early nineties, and construction for the next couple years, based on filings, looks like it's going to continue that way. So it's likely that apartment prices will continue fall or hold still.