Without affordable housing, Vancouver risks becoming an economic ghost town • Hacker News Board

Re: Without affordable housing, Vancouver risks becoming an economic ghost town

#331

Post by wrong_variable » Fri, Feb 12, 2016, 9:17 PM UTC

kareemm wrote: post #327

neptunespear wrote: post #299

I live in Vancouver. Well, Burnaby. Like many Vancouverites on HN I am studying for a comp sci degree, and want to work as a developer. I accept that I have to make sacrifices to keep living in Vancouver, such as: -Living in a suburb (like Burnaby) -Getting roommates/a shared room -Living on a bus route instead of being a 5 minute walk from Skytrain With those sacrifices, I can find rents for $750-1000/month. $750 is…

1BR inventory is not really an issue. Most of the new builds consist of small 1BRs so that developers can maximize their $ per square foot. rents on 2 or 3BR places have shot through the roof because there's very little supply being added. The real problem is that prices have become decoupled from incomes. The median home price is 10x more than the median household income (this includes condos and townhomes). The onl…

> The only reason for this is outside capital driving up prices.

Also known as inflation OR debt issued by your govt returning home.

Re: Without affordable housing, Vancouver risks becoming an economic ghost town

#332

Post by vkou » Fri, Feb 12, 2016, 9:19 PM UTC

gearoidoc wrote: post #310

vkou wrote: post #249

Earlier quoted context omitted.

Yes, it's enough to rent in a decent place, live comfortably, and save ~20K/year. A senior engineer in Seattle can do the same, and save ~100K/year.

I'd love to live in your world! How much do you think senior engineers earn? Most people would do well to save 20% but even assuming people save 33% then you reckon senior engineers earn over 300k?

Senior engineers at Microsoft/Amazon/Google earn ~200-400K USD. (All-in)

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.

Re: Without affordable housing, Vancouver risks becoming an economic ghost town

#333

Post by amyjess » Fri, Feb 12, 2016, 9:20 PM UTC

rb808 wrote: post #238

gorkemyurt wrote: post #211

One of the main reasons of the housing crisis in the Bay Area is Prop 13 ( https://en.wikipedia.org/wiki/California_Proposition_13_(197... ) Prop 13 basically keeps the property taxes constant (or 1% increase) as the value of your house increases (doubles or triples). Your tax gets re-calculated only if you sell your house and the new owner starts paying potentially multiples of what the previous owner has been payin…

Most countries dont have such high property taxes that the USA does. In London I paid $2500 a year in council tax and thought that was a lot of money, even though that was about 0.25%. Meanwhile NYC suburbs I'm now paying that every two months.

Depends on the state.

My aunt and uncle used to live in Bronxville, a suburb of NYC (it's part of Eastchester, which is in turn part of Westchester... NY municipal areas are confusing). They moved out in 2003, in large part because they were paying $25k/year in property taxes and they were both retired empty-nesters.

When they told this to me and my mom, we both thought it was insane. I was born in Texas, and my mom has lived in Texas since 1979. I'm not a homeowner myself (I rent a townhouse), but my mom is, and her property taxes in Dallas are around the same as what you paid in London.

This is one of the reasons I intend to stay in Texas for the rest of my life. Northern coastal cities are just completely insane in terms of expenses. New York is a wonderful place to visit, but I'd never live there.

Re: Without affordable housing, Vancouver risks becoming an economic ghost town

#334

Post by Agustus » Fri, Feb 12, 2016, 9:20 PM UTC

yellowbeard wrote: post #283

fiatmoney wrote: post #217

Earlier quoted context omitted.

Prop 13 has nothing to do with real estate price inflation. If anything, shifting of property tax burdens from long-time homeowners to new homeowners would tend to suppress prices. Shifting that burden evenly across the population would tend to cause more churn as long-time homeowners get pushed out, but would do nothing to increase aggregate housing or lower aggregate prices. Although, you can get pretty far into th…

Prop 13 has been argued (I'd say convincingly) to reduce liquidity: http://www.nber.org/papers/w11108 (Less churn - opposite of what you hypothesize)

How does Prop 13 work? The people who wrote that paper are saying that it is a subsidy; absolutely not. The tax rate is frozen, so as I understand it, the person simply pays a lower rate, it is not a system where a tax is paid and then has it refunded to them.

I am going to be highly critical of an economic research paper that looks at a tax as a subsidy, so here we go:

1. A tax rate lower because of a law than your neighbor is not a subsidy. A child deduction on an IRS form is not a subsidy.

2. The average length of stay for a home owner was increased by .11 years for Bakersfield, 2 years for Los Angeles, and 3 or more year for the Bay Area. Bakersfield, as far as I know, has no rent control, so there is an argument that this is essentially a rounding error. Los Angeles and the Bay Area are rent control cities, no where in the paper is this brought up as an externality forcing the longer periods of tenure ownership.

3. Table 1A shows that rental tenure increased from 4.30 to 5.25 years from 1970 to 2000, this is essentially the same increase as that of 10.76 years to 13.42 years for the home owners; 24.7% for the home owners and 22.1% for the renters. This should invalidate pointing to Prop 13 as the reason for longer owner stays.

4. Florida and Texas pass the same law and the paper simply says, forget them. The two states, Florida and Texas, go on to show that there is no impact from Prop 13, thus further invalidating their study.

5. Not one mention of rent control being a reason why people may not want to move out of their existing dwelling and purchase a home.

This may be a good paper to reference as a point, it is a horrible paper by ignoring externalities, comparable examples, and not examining differences between areas (Bakersfield vs. Los Angeles vs. San Francisco).

Re: Without affordable housing, Vancouver risks becoming an economic ghost town

#335

Post by tbirdx » Fri, Feb 12, 2016, 9:21 PM UTC

neptunespear wrote: post #299

I live in Vancouver. Well, Burnaby. Like many Vancouverites on HN I am studying for a comp sci degree, and want to work as a developer. I accept that I have to make sacrifices to keep living in Vancouver, such as: -Living in a suburb (like Burnaby) -Getting roommates/a shared room -Living on a bus route instead of being a 5 minute walk from Skytrain With those sacrifices, I can find rents for $750-1000/month. $750 is…

I lived in Vancouver (proper) for many years and as a developer $70k is a joke. Even moreso now that the Canadian dollar is hovering around 70 cents.

I now live in a city where the cost of living is substantially lower, and I make substantially more (about 100k). I could make more, but I don't have to. I spend about half my time traveling, something every Vancouver person aspires to do and yet never does. Leaving that city was the best choice I ever made.

Certainly I will visit in the future but I will never move back.

Re: Without affordable housing, Vancouver risks becoming an economic ghost town

#336

Post by danieltillett » Fri, Feb 12, 2016, 9:23 PM UTC

mahyarm wrote: post #236

msvan wrote: post #82

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 controlle…

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 tha…

You do know this is the water catchment for Hong Kong?

Re: Without affordable housing, Vancouver risks becoming an economic ghost town

#337

Post by tbirdx » Fri, Feb 12, 2016, 9:27 PM UTC

jessewmc wrote: post #152

lazzlazzlazz wrote: post #150

If having essentially no affordable housing rendered a city an economic ghost town, then much of the Bay area and Manhattan would be "ghost towns" - which, in turn, would lower housing prices radically. What might happen to Vancouver is probably similar to other major cities with housing crunches but an otherwise desirable economic climate: lower wage workers will be displaced further from the city and forced to comm…

The problem in Vancouver is the house prices are not driven by economic activity in the city itself. Bay area and Manhattan prices are a product of the local economies. Vancouver prices are a product of speculation and wealthy people who live/have property there but don't work there.

Bang on! At least if you made a reasonable wage it would be worth it, but everyone in Vancouver, including NHL superstars like the (Sedin) twins take a pay cut because they claim to love the opportunity to stay there. Every Vancouver employer I ever had gave me that line. "Sorry we can't pay you more, but you know, the rents! This is a great opportunity for you though". Later I found out that I made about 25-50% more than my colleagues, and I was vastly underpaid. It is a horrible work culture.

Re: Without affordable housing, Vancouver risks becoming an economic ghost town

#338

Post by Retric » Fri, Feb 12, 2016, 9:27 PM UTC

fiatmoney wrote: post #296

svachalek wrote: post #245

Earlier quoted context omitted.

A 4-bedroom house bought in the 70s is far more affordable than a 1-bedroom condo bought today, which creates a situation where no one can afford to move out of their homes. It's a massive tax benefit for themselves, their children, and grandchildren, that instantly and irrevocably goes away when they sell the house. No matter how high the market drives prices there is little incentive to sell. I don't know how much…

Those houses are lived in though (ignoring the whole issue of unoccupied investment properties). You can have an illiquid market with a ton of housing stock. The Bay Area has a problem with insufficient total housing stock, not with tax policy. You can see this via rental market prices, which are not locked-in like property taxes are. Imagine a Soviet grey-concrete apartment block. You get on the list when you're 18,…

The problem is staying becomes increasing attractive over time. Retired people save money by staying put, young workers can't afford to move in. This breaks the housing market.

SF is not a housing market it's effectively a planned communist community with a few bribes on the open market.

Re: Without affordable housing, Vancouver risks becoming an economic ghost town

#339

Post by danieltillett » Fri, Feb 12, 2016, 9:30 PM UTC

ISL wrote: post #325

If apartments are 25% vacant on speculation grounds, that's quite a bubble. I don't intend to do it, but for curiosity's sake: How does one go short on houses? "I'll pay you to let me borrow your house and sell it to someone else. Later, I'll get you an equivalent house." Never heard of anyone doing such a thing, but at the right up-front payment, I bet someone would take the deal.

In practice you can't, but you can short the banks lending into this bubble. Also building companies can be shorted.

The problem with going short on something like housing is the market can stay irrational longer than you can stay solvent. This bubble is being pushed by buyers who are not looking to make money, but to get money out of certain countries and providing a safe haven to flee to. Unless this changes then things won't get more rational.

If you had enough money you could short the banks and then whip up a media campaign of anti-foreign investment and xenophobia. Scare the market enough and you might get it to crash.

Re: Without affordable housing, Vancouver risks becoming an economic ghost town

#340

Post by skewart » Fri, Feb 12, 2016, 9:40 PM UTC

serge2k wrote: post #308

skewart wrote: post #142

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 d…

Vancouver is a great place to live, people don't stay there because they are forced to.

For sure. I didn't mean to imply that they do.