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All These New Rental Policies May Make Things Much Worse

  • By Daniel Greenhalgh
  • •
  • 11 Jul, 2019

If you’re going to get into politics in southern B.C., you’ve most likely got a few strong ideas about how government should best address the housing crisis. Once you get elected, by whatever miracle, you’re going to want to get your feet wet as quickly as possible with some new proposals, new ideas, something tangible to support your claims to voters that you’re doing something for them. 

But in the effort to “do something”, these eager politicians, with strokes of a pen, may cause so much unintended turmoil in the housing market that they wind up making the affordability problem much worse. There are so many infallible facts about the workings of any economy - especially one so rife with ‘interpretation’ and so dependent on investor confidence as the real estate market in Vancouver - that any attempt to bend it to your will through sweeping new rules or taxes will have ripple effects that even highly trained economists can’t predict, much less politicians who’ve likely never run a business. 

These are mostly sincere public servants who want to put their weight towards balancing the extreme discrepancies between local incomes and housing prices/rental rates. They’ve been given a very strong mandate to do just that. Many of them have been renters for a good part of their lives and are determined to be a voice for that community. 

In Burnaby, for example, the new municipal government led by Mayor Mike Hurley is determined to undo the policies of the 16-year incumbent he defeated. Hurley put together an all-encompassing package of rental-only zoning policies to stop the demolition of purpose-built rentals in his city. 

Last month, the Burnaby city council unanimously voted to implement this package, which includes a requirement for developers to replace every rental apartment they demolish on a one-to-one basis. The replacement apartments must be rented at affordable rates, i.e. 20% below rental market average. This winds up being about 40% less than a market rate for a new purpose-built rental unit. Displaced tenants are also given the ‘right of first refusal’, meaning they have the option of moving back into the new apartments built on the site of their old one.

These measures, and most of the measures in the pipeline, are all perceived as weapons against a developer making too much money while long-term rental residents are left looking for a new home with higher rents. The people get behind this, of course, because it looks like politicians are protecting the little guy against big evil companies. And while it’s arguably government’s job to reign in out-of-control greed, in this case, the government’s mandate requires them to facilitate the construction of as many new purpose-built rental units as possible. 

Simply put - after these new rules and restrictions, what developer is going to want to build in Burnaby? 

Politicians respond that sure, the profits won’t be as high, but they’ll still be getting filthy rich. But these policies will make it so difficult to not only fund a project, but to ever see a real profit from it, that the units we all desperately need are just not going to get built. 

David Hutniak, CEO of Landord BC, believes Burnaby’s new policies are “not even realistic, almost bordering on ridiculous.” He believes no developer will build rental housing in the city as long as these policies are in place.

Across Metro Vancouver, 62% of new households are renters. There’s a big push for every municipality to better serve them. But in punishing the suppliers of the units they need, these municipalities are doing what politicians do best: grabbing short term victories and pats on the back, while sacrificing the long-term needs of their citizens. 

 

The Grand Canyon

By Dan Greenhalgh • 25 Jul, 2019

The Grand Canyon

     A while ago, I got to go and see one of the seven natural wonders of the world, the Grand Canyon.


     We drove to the South Rim from where we were staying, and arrived in the late afternoon. It was hot and sunny, and we didn’t really know what to expect from the wonder. As we rolled in, there were lots of trees and shrubbery around, making it difficult to see the canyon yet. We drove through several different parking lots until we found a place to park. It was surprisingly busy!

     From the parking lot, we walked down until we found a path going along the South Rim, and followed it, enjoying the breathtaking views along the way. There were lots of areas along the ridge that allowed you to sit on the ledge and look over the canyon, without the risk of falling down into the canyon.

     At one point, we found a trail heading down into the canyon, and we went part of the way down. Part way, we stopped at a funny little outcrop to enjoy the view. In a future visit to here, I would enjoy hiking all the way down to see the wonder from a different perspective. After this, we hiked back up and continued on our way.

     As we walked around, we came to a tower with a fantastic view of the canyon. In the bottom of the tower was a shop with souvenirs, and we went up a winding staircase to the top of the tower. At the top, a thick wooden door led to a large balcony with a fantastic view of the canyon. By the time we got here, we were able to catch the sun setting over the natural wonder. The sunset filled the sky and the Grand Canyon with breathtaking shades of yellow, red, and orange. It was an incredibly memorable end to a beautiful day at the Grand Canyon.

City of Vancouver Adds Protections and Education Initiatives for Renters

By Daniel Greenhalgh • 09 Jul, 2019
City of Vancouver adds protections and education initiates for renters; . The primary purpose of these initiatives is to ensure that renters are educated on the policies that affect them, and that they’re armed with all available tools to advocate for their needs

The Great Condo Incentive Race

By Dan Greenhalgh • 04 Jul, 2019

The real estate downturn - the fact that housing prices aren’t exploding as they have been the last few years - continues to make developers with condo projects in some stage of completion very nervous about making as much as they projected, and promised to their investors, and bankers and rivals and wives.


 It is a real downturn, to be clear. The Real Estate Board of Greater Vancouver claims that we’re currently in the biggest housing slump of the last 19 years. There are currently 25,158 condo units under construction in Metro Vancouver. At least 5,000 of those units have been taken off the market temporarily, in hopes the market will get back to golden soon. It’s hard to get rid of the visions of the block-circling lines of buyers from what seems like yesterday.


 A big reason for the halt in pre-sale condo purchases is the introduction of the foreign-buyers’ tax in August 2016. Condos went from being on the market for mere hours to lingering there for what’s now an average of 40 days or more. While this was presumably the point, the less desirable consequence is the parallel pause in the much-needed rental units that are part of a good number of these projects.


 For those developers who’ve chosen to stay in the race, the incentives for prospective buyers are fast becoming a source of entertainment for the spectators. So far, they’ve included the incredibly pandering ‘avocado toast’ incentive for buying a unit in a West Coquitlam project built by Woodbridge Homes. The ploy definitely worked, as a media primed to write about anything millennial went wild with the story, resulting in Woodbridge moving 60% of their inventory after the announcement. (They also reduced the down payment from 15% to 10% of the cost of the unit, but that’s boring.)


 Not to be outdone, Wesgroup decided to add a free glass of wine every day for a year to their list of buyer perks for their new development in the River District. This adds to their discounts of $10,000 for 1 bedrooms, $15,000 for 2 bedrooms and $20,000 for three bedrooms in the new project.


 The same company threw a bone to its rental customers, offering to pay for moving expenses for new residents of their New Westminster purpose-built rental project.


Other companies have enticed buyers with six months of free living; a $5,000 gift card to Urban Barn; and free skiing and golf for a year plus mountain bikes for the family (or just the cash equivalent). There’s also just a much more enticing environment for negotiations on things like decoration services, amenity upgrades, parking stalls and the like.


So it’s a good time to buy if you have the means. And it’s a good time to get creative with demands. Gym memberships? Vacation packages? Season tickets to the Canucks? It’s all on the table. As the old folks say, you never know how far a frog’ll jump until you poke it.  

 

 

 

 

 

 

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