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High-end house rents in Vancouver plunge up to 20% as inventory spikes: experts

vancourier.com

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Re: High-end house rents in Vancouver plunge up to 20% as inventory spikes: experts

#11

Post by jimrandomh »

goatherders wrote: post #9
tspike wrote: post #5

This is great news and may serve as a model for other cities facing similar housing shortages. Was the speculation tax a ballot measure or something passed at the city council level?

I believe the city has been adding different things for the last couple years trying to open up more rentals. If I recall correctly something like 25% of all condos downtown are unoccupied which is insane. They arent even available to rent, just sitting their empty. It has had a real effect on employment, especially in tech. A friend of mine at hootsuite laments that sometimes they miss on great hires because even th…

> If I recall correctly something like 25% of all condos downtown are unoccupied which is insane. They arent even available to rent, just sitting their empty.

You do not recall correctly. https://www.reuters.com/article/canada-housing-vancouver/nea...

Re: High-end house rents in Vancouver plunge up to 20% as inventory spikes: experts

#13

Post by romed »

jimrandomh wrote: post #11
goatherders wrote: post #9

Earlier quoted context omitted.

I believe the city has been adding different things for the last couple years trying to open up more rentals. If I recall correctly something like 25% of all condos downtown are unoccupied which is insane. They arent even available to rent, just sitting their empty. It has had a real effect on employment, especially in tech. A friend of mine at hootsuite laments that sometimes they miss on great hires because even th…

> If I recall correctly something like 25% of all condos downtown are unoccupied which is insane. They arent even available to rent, just sitting their empty. You do not recall correctly. https://www.reuters.com/article/canada-housing-vancouver/nea...

5% is barely a functioning market. Normally you'd expect 8-10% vacancy rate in a well-supplied housing market.

Re: High-end house rents in Vancouver plunge up to 20% as inventory spikes: experts

#14

Post by Patrick_Devine »

tspike wrote: post #5

This is great news and may serve as a model for other cities facing similar housing shortages. Was the speculation tax a ballot measure or something passed at the city council level?

It's hard to draw direct comparisons between Vancouver and San Francisco's housing markets. Canada, as well as each of the provinces, local municipalities, and cities, have representational democracy, not a quasi-direct democracy like California.

The spike in affordability in Vancouver wasn't caused directly due to a shortage in housing stock and an influx of residents. It was caused by rampant speculation from people essentially using Vancouver as a safety net to park wealth.

I can't overstate how detrimental this is to a city. What you end up with are entire neighbourhoods which are occupied at 50% or less, and yet with the value of the homes exceeding $2-$4 million. It causes stores in those local neighbourhoods to close because there aren't enough customers. It taxes the fire department because no one is there to call 911 when a fire starts. It guts schools because there aren't enough kids to fill classrooms.

And with all of this going on, former local residents and young people are pushed further and further out of the urban core due to affordability. Vancouverites make less than half of what an average tech salary pays in the SF Bay Area, and the jobs are much harder to come by.

That said, yes, Airbnb and other vacation rentals were exacerbating the problem, and causing Vancouver to turn further into a vacation/tourism destination instead of a real working city. San Francisco suffers from this to a certain extent, however, its real problem is that it has a massive influx of workers due to a booming tech economy, and not enough housing stock to accommodate all of those workers.

Re: High-end house rents in Vancouver plunge up to 20% as inventory spikes: experts

#15

Post by Tiktaalik »

jimrandomh wrote: post #11
goatherders wrote: post #9

Earlier quoted context omitted.

I believe the city has been adding different things for the last couple years trying to open up more rentals. If I recall correctly something like 25% of all condos downtown are unoccupied which is insane. They arent even available to rent, just sitting their empty. It has had a real effect on employment, especially in tech. A friend of mine at hootsuite laments that sometimes they miss on great hires because even th…

> If I recall correctly something like 25% of all condos downtown are unoccupied which is insane. They arent even available to rent, just sitting their empty. You do not recall correctly. https://www.reuters.com/article/canada-housing-vancouver/nea...

He was probably thinking of Coal Harbour, a downtown neighbourhood which did have a census non-occupied by usual residents rate between 20-25%.

Re: High-end house rents in Vancouver plunge up to 20% as inventory spikes: experts

#17

Post by kitcar »

meritt wrote: post #16

> A $3 million house that would have rented for $5,000 a year ago $5k/mo for a $3M home is a cap rate of just 2%. That's pretty terrible in itself. Now it's $4k/mo or 1.6%? How on earth is that financially sustainable at either amount?

In many cases the owners do not view it as an investment, it's a store of wealth that is difficult for the government of their home country to seize. Hence even if they lose money every year it's better then the alternative -

Re: High-end house rents in Vancouver plunge up to 20% as inventory spikes: experts

#19

Post by roel_v »

meritt wrote: post #16

> A $3 million house that would have rented for $5,000 a year ago $5k/mo for a $3M home is a cap rate of just 2%. That's pretty terrible in itself. Now it's $4k/mo or 1.6%? How on earth is that financially sustainable at either amount?

Depends on your cost of capital.

Re: High-end house rents in Vancouver plunge up to 20% as inventory spikes: experts

#20

Post by ryanworl »

meritt wrote: post #16

> A $3 million house that would have rented for $5,000 a year ago $5k/mo for a $3M home is a cap rate of just 2%. That's pretty terrible in itself. Now it's $4k/mo or 1.6%? How on earth is that financially sustainable at either amount?

You can sustain low cap rates if your model includes significant appreciation and you can stomach negative/zero cash flow.
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