Without affordable housing, Vancouver risks becoming an economic ghost town

http://business.financialpost.com/entrepreneur/fp-startups/without-affordable-housing-vancouver-risks-becoming-an-economic-ghost-town

by eigenvector • 10 years ago

279 605 10 years ago

business.financialpost.com

hellofunk• 10 years ago

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?

maxxxxx• 10 years ago

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.

kyllo• 10 years ago

Exactly, the best job you can get in Vancouver right now is... Real Estate Agent. And you have to speak Mandarin.

anuj_nm2• 10 years ago

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.

galago• 10 years ago

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.

rchaud5• 10 years ago

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.

http://www.cic.gc.ca/ENGLISH/immigrate/business/investors/in...

jhou22• 10 years ago

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.

sricciardi• 10 years ago

London is also suffering from gentrification (https://en.wikipedia.org/wiki/Gentrification)

HorizonXP3• 10 years ago

That was going to be my question.

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.

stuxnet792• 10 years ago

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.

Ologn• 10 years ago

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.

ucaetano• 10 years ago

Berlin's values have risen to the point where rents are on average 10 euros per square meter.

You can rent a 100 sqm for only 1000 euros per month!!!!

You can't get 40 sqm for that same amount in Paris.

tomkinstinch• 10 years ago

Berlin seems like an amazing value for a capital city with rich culture.

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?

jlangenauer2• 10 years ago

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.)

te_chris• 10 years ago

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.

yardie• 10 years ago

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.

legulere• 10 years ago

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.

rootbear• 10 years ago

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.

infinite8s5• 10 years ago

DC also has height restrictions due to the 1899 Height of Buildings Act (amended in 1910 to effectively restrict buildings to no taller than 13 stories - http://www.welovedc.com/2009/05/19/dc-mythbusting-the-height...).

maxsilver3• 10 years ago

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.

cgh• 10 years ago

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.

mr_november2• 10 years ago

Low avg income in Vancouver is unique vs the other cities you cite. Much lower. Apparently ~$44k in 2009[1]

[1] http://www.theglobeandmail.com/life/home-and-garden/real-est...

legutierr• 10 years ago

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.

kitcar• 10 years ago

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

https://southfloridaforbeginners.wordpress.com/2012/04/04/th...

ryandrake• 10 years ago

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.

zanny2• 10 years ago

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.

pascalmemories• 10 years ago

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.

UVB-76• 10 years ago

Council tax in the UK is not really comparable to property taxes in other countries like the US.

It's a highly regressive tax, and utterly negligible when considering prime real estate in areas like London.

nutmeg• 10 years ago

Why have taxes at all if rich people always find a way around these things? Or laws, for that matter?

jamespo• 10 years ago

Well let's just abandon all taxation by that argument

CaptSpify• 10 years ago

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.

jonknee3• 10 years ago

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.

Shivetya• 10 years ago

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

goldbrick4• 10 years ago

You have things upside down. Property rights only exist because of law. Also, when did property rights become vital to democracy?

dragonwriter2• 10 years ago

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.

Zach_the_Lizard3• 10 years ago

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.

munificent• 10 years ago

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.

notahacker• 10 years ago

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.

Yhippa• 10 years ago

Where does the youth diaspora in Vancouver lead to? The suburbs? Other cities in Canada or the US?

jhou22• 10 years ago

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.

anuj_nm2• 10 years ago

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.

Zanta• 10 years ago

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.

serge2k7• 10 years ago

Loads go to the US. TN is easy to get and you can get close to (or more than) 50% higher salary (not including exchange rate, before tax).

generalpf• 10 years ago

You have to lie and say you're a systems analyst to get a TN visa. (Been there, done that, got the t-shirt.)

swizerguos2• 10 years ago

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

kentt• 10 years ago

I'm an hour outside of Vancouver in Abbotsford. Housing is still high, 300k for a single detached unit, but it's very liveable.

empressplay2• 10 years ago

A modest house in the suburbs of Victoria is 400K now so that's not too bad, really.

cperciva2• 10 years ago

The suburbs?

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.

darryl422• 10 years ago

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.

goalieca• 10 years ago

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.

alexandar• 10 years ago

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.

cdnsteve• 10 years ago

Vancouver real-estate is like buying gold for foreign investors, without paying tax.

"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...

jseliger2• 10 years ago

This is the best response I've seen so far. Real estate is actually a great export for cities and countries, at least properly considered: http://www.slate.com/articles/business/billion_to_one/2013/1....

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.

rgoldade• 10 years ago

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.

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.

pjc502• 10 years ago

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?

onion2k• 10 years ago

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.

[1] http://www.theguardian.com/housing-network/2016/feb/12/tory-...

brc5• 10 years ago

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.

serge2k7• 10 years ago

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.

fm95• 10 years ago

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.

swizerguos2• 10 years ago

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

branchless2• 10 years ago

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.

Sideshow_Boob• 10 years ago

i think i love you

option_greek• 10 years ago

"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.

epimetheus• 10 years ago

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.

potatolicious• 10 years ago

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.

CalRobert• 10 years ago

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.

bishnu• 10 years ago

The only issue with Montreal is, not speaking French will disqualify you from a few different kinds of jobs.

ldd• 10 years ago

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.

HorizonXP3• 10 years ago

E-mail me.

dubiousness• 10 years ago

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.

trgn• 10 years ago

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.

jdkenney• 10 years ago

Consider Quebec City as well - it is significantly more romantic for an anniversary occasion!

AYBABTME• 10 years ago

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.

rchaud5• 10 years ago

Higher taxes should come with the benefit of more services

Daycare services in the province are absurdly cheap compared to anywhere else in the country.

surement2• 10 years ago

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.

johnatwork3• 10 years ago

- 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.

- And it was named the most corrupt Province in Canada. http://www.macleans.ca/news/canada/the-most-corrupt-province...

jpambrun4• 10 years ago

I'm pretty sure that the OQLF works on a complaint basis.

branchless2• 10 years ago

As I said when they rack up $500K corruption I'll have equivalent living costs to Vancouver.

Apocryphon2• 10 years ago

How's the tech scene in MTL?

rumiarabi• 10 years ago

Probably second to only SF in North America for the game industry, SFX for the film industry is also big here.

badloginagain6• 10 years ago

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.

rchaud5• 10 years ago

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.

jdminhbg• 10 years ago

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.

ghaff7• 10 years ago

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.

serge2k7• 10 years ago

but I don't want to live in Quebec.

empressplay2• 10 years ago

Melbourne's just as horrible. So's Sydney. So are a lot of places.

danieltillett3• 10 years ago

At least Sydney has nice beaches. I do agree that housing here suffers the same issues. We need a massive unimproved land value tax.

tajen• 10 years ago

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?

grayfox• 10 years ago

Currently residing within Vancouver.

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. :)

JoeAltmaier2• 10 years ago

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.

ghaff7• 10 years ago

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.)

tetraodonpuffer• 10 years ago

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.

ghaff7• 10 years ago

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.

iheartmemcache2• 10 years ago

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).

rconti7• 10 years ago

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.

ajmurmann• 10 years ago

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?

GFischer5• 10 years ago

I think that's one of the causes, the other is the excessive money supply:

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.

ap3• 10 years ago

As someone who doesn't own any property, I really hope the housing bubble explodes.

Where were you 5-7 years ago?

api_or_ipa2• 10 years ago

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.

bonesmoses• 10 years ago

Isn't that a housing issue, though? Paying for a $2350/mo place on $60k is... pretty ridiculous.

gearoidoc6• 10 years ago

I'd argue its impossible since $2350 is almost half your monthly salary before tax!

edwinnathaniel4• 10 years ago

That's a lifestyle issue.

No fresh grad ($60k) should live in "trendy" Yaletown district with 2 BR + 2 Bath.

api_or_ipa2• 10 years ago

I split it with a roommate. I lived 10 mins from my work, which vastly improved my quality of life and saved me money on transit.

I estimated I was paying $100 more to live in downtown, but that was almost equivalent to the savings in transit fares.

jimpick• 10 years ago

This!

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.

pakled_engineer• 10 years ago

The taxes are also high https://simpletax.ca/calculator

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.

rubiquity2• 10 years ago

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.

yarrel2• 10 years ago

s/occupied/owned/

gearoidoc6• 10 years ago

CAD 110k is definitely enough to get a decent place, live comfortably and save some money in Vancouver.

But then again 'decent' and 'comfortably' are subjective.

edwinnathaniel4• 10 years ago

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.

merpnderp2• 10 years ago

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.

hoelle• 10 years ago

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.

alwaysAttending• 10 years ago

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.

personjerry• 10 years ago

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).

newman3142• 10 years ago

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.

fiblye• 10 years ago

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.

darryl422• 10 years ago

"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.

vehementi7• 10 years ago

Every other post in this thread starts with "No, the real issue is..."

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?

TragicJam• 10 years ago

I've always considered Vancouver (tech) salaries to be fairly competitive compared to the rest of the Canada. (I'm a Vancouver dev)

gabbo• 10 years ago

In other words they're quite low vs. comparable American cities :)

jwomers• 10 years ago

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?

justinhj• 10 years ago

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.

gearoidoc6• 10 years ago

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.

didip• 10 years ago

This is just anecdotal, but that price point at the quality you want is possible in downtown San Jose.

p4wnc62• 10 years ago

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.

circlefavshape• 10 years ago

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

lmm6• 10 years ago

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.

p4wnc62• 10 years ago

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 this is highly questionable.

pessimizer• 10 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.

jmspring• 10 years ago

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.

hvmonk2• 10 years ago

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.

rconti7• 10 years ago

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.

HorizonXP3• 10 years ago

Just realized that a lot of people in this thread may be Canadians looking to shift around.

If you're interested in working on cool engineering problems in Toronto, e-mail me.

theworstshill2• 10 years ago

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.

rchaud5• 10 years ago

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?

theworstshill2• 10 years ago

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.

msvan2• 10 years ago

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.

dnlhmt• 10 years ago

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.

https://en.wikipedia.org/wiki/Public_housing_in_Singapore

tempestn• 10 years ago

Tough to employ that model if the government doesn't already own the land though.

ghshephard• 10 years ago

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.

badloginagain6• 10 years ago

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.

refurb8• 10 years ago

Also, the real problem is foreign ownership.

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...

skewart5• 10 years ago

"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.

msvan2• 10 years ago

I'm basing my judgment on hearsay. I was under the impression that HK property prices were through the roof, so I stand corrected.

neves2• 10 years ago

German has some solutions: http://www.macrobusiness.com.au/2011/06/how-germany-achieved...

sauere2• 10 years ago

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.

thescriptkiddie• 10 years ago

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.

brc5• 10 years ago

They are crappy because of the rent control.

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.

rsync• 10 years ago

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.

chaostheory• 10 years ago

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.

mahyarm5• 10 years ago

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.

Nicholas_C• 10 years ago

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?

danieltillett3• 10 years ago

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

Kluny• 10 years ago

5. Legalize and encourage squatting to make life difficult for speculators. Impractical, but fun :)

sauere2• 10 years ago

4. is the only solution.

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.

api3• 10 years ago

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.

otoolep2• 10 years ago

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.

ajeet_dhaliwal• 10 years ago

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.

webmaven3• 10 years ago

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.

oftenwrong• 10 years ago

You don't need to build tall to increase density.

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.

Grishnakh12• 10 years ago

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.

Tistel2• 10 years ago

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)

jpambrun4• 10 years ago

Salaries are also much lower in Montréal. If you are willing to learn French, you will be very welcome.

Tistel2• 10 years ago

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.

pfarnsworth2• 10 years ago

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.

messick• 10 years ago

"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"

http://www.vancouvereconomic.com/film-television/

jnowlan• 10 years ago

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?

http://www.economist.com/blogs/dailychart/2011/11/global-hou...

Detroit probably experienced a R.E. bubble in the day...

matrix• 10 years ago

Yes. I'm told that some people who bought property in Vancouver the early 80's were upside down on their properties for 15 years.

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.

lmm6• 10 years ago

https://en.wikipedia.org/wiki/Lost_Decade_(Japan)

Everything is still disputed, but Tokyo real estate prices certainly played a part. There was no crash as such, but rather a stagnation.

DrScump11• 10 years ago

Oh, sure. In the Bay Area, prices drop substantially after every bubble / recession (early 90s, 2000, mid-2000s).

skewart5• 10 years ago

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.

ghaff7• 10 years ago

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.

skewart5• 10 years ago

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.

serge2k7• 10 years ago

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

skewart5• 10 years ago

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

hardcandy• 10 years ago

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.

odbol_• 10 years ago

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!

patmcc• 10 years ago

Yes, BC sets sensible maximum rates that rent can be increased per year (usually on the order of inflation, ~2%).

jseliger2• 10 years ago

San Francisco is an outlier given the extremely dense concentration of high paying jobs which drove housing into orbit

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.

maxsilver3• 10 years ago

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)

---

(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?

lazzlazzlazz• 10 years ago

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 commute, housing prices will remain astronomical and suck much of the gains from the area.

jessewmc• 10 years ago

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.

vonnik2• 10 years ago

You should look more closely at Manhattan and SF. There is a ton of speculation, luxury highrises, and out-of-town wealthy buying second-, third- or fifth homes.

stanmancan• 10 years ago

Exactly this. A significant portion of the housing is being bought by foreign investors who don't even live here. Not only is it raising the pricing of the housing, but you don't get the economic benefit of said wealthy individuals living in the city.

I recall reading an article about a local coffee shop. A number of new buildings were built around it, all residential condo's. The condo's in the buildings were completely sold out, hundreds of units, yet it was a ghost town around there. The coffee shop, and I believe a local pub as well, ended up going out of business because despite all the units being purchased, nobody actually lived in them.

Similar experience, my office is in the heart of downtown, right on the water. A beautiful building went up beside us, all condo's for sale, starting at $1.5 million. They got bought up instantly. However, once the building opened, I looked out my window and into a building where 90% of the units remained completely empty (no curtains) for well over a year until I switched desks. Foreign investors buy up all this property and it just sits there...empty. Meanwhile everyone that lives and works here is being priced out.

BurningFrog2• 10 years ago

So why do speculators choose Vancouver of all places to speculate in?

pfarnsworth2• 10 years ago

Except it's been this way for 30 years. Vancouver house prices have always been higher than Ontario, even back in the 80s when I lived there. So speculation is one thing, but 30 years isn't speculation. And back then they were saying it was foreigners too, especially from Hong Kong. But it's 30 years later, and the house prices haven't abated at all. That isn't speculation, that's a permanently high prices.

When my parents bought their house there it was $275,000 it was almost 75% higher than our house in Toronto. And they sold it for $1,300,000 a few years ago. Crazy, but it's only annualized 6% over 25 years, less than the stock market (but higher than normal real estate I'm assuming). However it's prime Vancouver real estate with fantastic schools, a case could be made that it's worth it if you compare to San Francisco.

The only difference is that no one knows where the money is coming from for the last 30 years. There is no industry in Vancouver, except tourism and the average salary is ~60k.

rezashirazian• 10 years ago

As someone who grew up in Vancouver this sums up the problem.

tbirdx2• 10 years ago

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.

prostoalex• 10 years ago

I have an anecdotal example of a friend living in SF complaining about high price of garbage disposal installation. To me it made sense, as anybody making living as a plumber is likely to be priced out of SF (unless they bought back in the 70s), so you're paying for guy's commute from Union City or Hayward or Fremont + garbage disposal installation + commute back.

eigenvector6• 10 years ago

The article's gist is that Vancouver lacks the "otherwise desirable economic climate" that makes the SFBA, Manhattan and London housing markets at least tolerable. Rather than being a side-effect of explosive economic growth as in SF, the housing prices are totally out-of-step with the local economy.

yelnatz• 10 years ago

It's really painful.

Having average home price of $1.8m while the median salary is at $60k. Something really needs to be done to help out Vancouverites.

mahyarm5• 10 years ago

As someone who moved from Vancouver to SF 4-5 years ago:

1. You can drive across a bridge to the east bay and find housing that is half price in semi decent neighborhoods. You can drive out for 2 hours and find housing that is the standard american price. In vancouver, driving for an hour just gives you a 100-200k discount on housing that is already over $1 million, there are no real affordable places to escape to unlike the USA.

2. Nobody in vancouver makes an income over six figures unless you're in the standard professions that make that much, such as doctors, high level managers and successful business owners. Only a very small amount of people are in those professions, and those jobs are not concentrated in any specific area. You could go be a doctor in quebec, alberta or some other small town and still make a similar income but have a far lower housing cost. There is nothing unique or high powered economically about Vancouver, it's not the center of anything. Vancouver's economic climate is NOT desirable.

3. This affordability issue has been a problem for almost a decade, and the provincial & federal governments show no real signs of having any desire to fix it. The only thing that makes it pseudo-affordable is the fact that rent is usually half price to a current mortgage. Housing has increased in vancouver 1:1 with the GDP of the city last year, which is freaking insane. People who have owned houses have gained more than their incomes for years! For comparison, the crazy SF Bay Area is something around 1:6 with (house value increases):GDP.

4. If you're stuck in canada, then there are better places to go to as far as money:price ratios go.

I could go on and on about this, but you get the general idea. Vancouver is pretty much dead to me economically and it saddens me that it will never be a good idea to move back at this rate.

analyst74• 10 years ago

"The only thing that makes it pseudo-affordable is the fact that rent is usually half price to a current mortgage."

That is an important point, and why some of my friends moved there despite knowing they won't be able to buy their own place. This also seems quite unique to Vancouver, in most other places, like SF, high housing prices implies high rental prices.

edwinnathaniel4• 10 years ago

2. Nobody in vancouver makes an income over six figures unless you're in the standard professions that make that much, such as doctors, high level managers and successful business owners

Intermediate Software Developers these days made that much for a select few companies (thankfully large ones that hire more and more people).

beatpanda• 10 years ago

Plot twist: most of the Bay Area is a ghost town, culturally.

gniv• 10 years ago

Previous discussion (also today) here: https://news.ycombinator.com/item?id=11086981

dang• 10 years ago

Ok, we merged the threads. Thanks!

The current article seems to be the original source, so we'll keep it.

yarrel2• 10 years ago

Vancouver is becoming a store of value rather than a city.

neves2• 10 years ago

Article summary: Vancouver is expensive, their young, creative and fun population will leave because they can't afford a house. Let's burn down its antique building restrictions, and build big skyscrapers where no neighbor knows each other, now the young, creative and fun population can live in a gray place and become old, dull and boring.

Hope they can read a little of Jane Jacobs: https://en.wikipedia.org/wiki/The_Death_and_Life_of_Great_Am...

sandworm1018• 10 years ago

Vancouver's problem isn't the house prices. The problem is to a large extent caused by the author of this piece, the Hootsuite CEO. The few tech companies in vancouver don't pay. They expect the city to provide them a steady flow of over-educated 20-somethings willing to work long hours for only slightly more than rent. For the last 15 years the city has provided just that. The complaints now are that those 20-somethings want to own stuff. They want a house. They want to own a dog that isn't left alone 10+ hours every day. They want families. So it is time to let them go and demand the city provide a new flock.

What every company in Vancouver seems to want is an employee who is desperate for work but also independently wealthy. That might seem a conflict but in Vancouver it is normal. There are thousands of young people here who are supported by parents who have enjoyed the rise in house prices. They are desperate for work, but don't much care about the pay because they have support. Hootsuite's problem is that many of those kids are now in their thirties, mom and dad have moved, and they want to have an actual life of their own. That cannot happen at 30k in a city like Vancouver.

(Lets see how long it takes for this comment to hit a nerve. Hoot is a social media company with eyes everywhere.)

vvanders• 10 years ago

Man, lots of parallels to game-dev here. You see an almost similar problem, albiet that it means the average career is ~3 years instead of being a geographical migration.

sandworm1018• 10 years ago

I used to work in the Vancouver film industry. I remember an interview with some of the Stargate people where they laughed at the fact that most of the CG guys working on the shows final years (SG Atlantis) were in diapers when SG1 started. As soon as the novelty wore off and they wanted pay, everyone left. Anyone who thinks actresses age quickly in Hollywood, look at the teenagers who work in CG.

vkou8• 10 years ago

Incidentally, there is also a lot of game dev in Vancouver.

lewisl9029• 10 years ago

This goes for Canadian employers in general, not just those in Vancouver. I'm not sure how they expect to retain talent when they offer on average about half the salary of similar positions in the US when adjusted for currency (and I'm not even talking about SF... Seattle is a 3 hour drive from Vancouver and moving there can easily double your salary with a comparable cost of living), especially since the barrier to entry into the US is practically non-existent for citizens.

Understandably, employers in Canada want to save money by competing only with their Canadian neighbors in terms of salaries, but this attitude seems extremely shortsighted to me, and results in a vicious negative feedback loop: companies offer lower salaries -> low availability of higher tier talent -> companies under-compete -> companies can now only afford lower salaries -> rinse and repeat. I believe this has been having a profound effect on competitiveness of the Canadian tech industry as a whole (see Blackberry/RIM as a prime example of this phenomenon).

As a recent Waterloo grad, I've witnessed the brain-drain first hand. Everyone I know from school who's any good has left for lucrative US positions, and I'll probably be joining them soon.

sandworm1018• 10 years ago

The US, even Seattle, can be a culture shock for many Canadians. It is a very different country. I know of several people who have fled the US after only a couple years. It generally boils down to race, religion and guns, all of which are radically different on either side of the boarder. It's not that one is better than the other, but that a person raised in one environment can be taken aback by the immediacy of the change.

badloginagain6• 10 years ago

The few tech companies in vancouver don't pay.

The tech companies in Vancouver haven't increased pay in step with skyrocketing housing. If you can find data on employee pay in the tech industry (good luck) you'd find it'd be fairly consistent. Compared to housing prices in Vancouver, you'd likely be looking at hockey stick growth. That's the disconnect.

If Hootsuite paid minimum wage, but cost-to-live was free, then it's a really good deal for developers.

Besides, you're ignoring the rest of the local economy. Tech is only a small part, and fixing it for one small sector isn't going to do much on a macro scale.

sandworm1018• 10 years ago

>> Tech is only a small part, and fixing it for one small sector isn't going to do much on a macro scale.

Very convenient. Not attempting to fix a problem until everyone else is onboard is a great way of not doing anything. If tech companies want to retain talent, pay for it. Don't lambaste the city or the economy. There is nothing more hypocritical than a CEO of a profitable company complaining about retention. If you are profitable then you can afford to pay your people more. Complain about the city when you cannot find the people needed to make ends meet, not when they are inconveniently expensive.

sshrinivasan• 10 years ago

The price-to-income ratio, a good indicator of affordability is quite ridiculous here. It should be around 4, i.e your home value should be 4 times your gross household yearly income, its closer to 12 here. I believe in this, and though my family makes a good income, in order to meet this ratio I had to move further out to Richmond. Don't regret it at all, since it eases the stress of requiring two well paid jobs just to live a decent life. But the lack of available rental properties, rampant foreign speculation, low interest rates is a pretty perfect storm.

sliverstorm2• 10 years ago

Does the fixed price-to-income ratio actually hold meaning across a wide range of mortgage interest rates?

mwnz• 10 years ago

Take note, Auckland. The same dynamics exist there.

epx• 10 years ago

I see that as a worldwide problem, as interest rates tend to zero.

In Brazil, real estate prices are completely out of touch with median income (at least, the rents are still affordable, because the typical landlord owns only one or two places and simply needs to rent to cover taxes and maintenance, he cannot sit on them).

Economists and governments paid too much attention to the inflation of the Big Mac and forgot real estate and other hard assets. Also, govts have a huge incentive to allow real estate bubbles: tax revenue, abundance of blue-collar jobs while the construction frenzy lasts, illusion of prosperity for whoever already owns the home, etc.

Yet another possibility is that too many people need to put dirty or excess money in a 'safe' investment. I hear that Chinese buy a lot of real estate in London, Vancouver, etc. At least here in Brazil, the money you have in a bank can be frozen in a milissecond if you are suspect of a crime, but controls over real state are very lax, so a lot of corruption money goes into real estate, which fuels the bubble.

volune• 10 years ago

Monoco s a ghosttown...

gorkemyurt4• 10 years ago

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 paying in taxes. This works great for older people who own property they can basically stay at their home forever, but it creates an unfair situation for new comers in the area and the newer generations.

How are property taxes calculated in other places in the world? Vancouver? London? Tokyo?

This is such a hard problem to solve, no one wants to force elderly people to move because of a bull real estate market, but you also need young hard working people in your city for economic growth. My solution would be to jack up the real estate inheritance tax and allocate that money for public transportation and affordable housing.

fiatmoney4• 10 years ago

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 the weeds trying to evaluate the effect of housing stability on political economy - NIMBYism would be expected to be stronger in longer-tenure populations, for instance.

Stability of tax policy is a fantastic thing for encouraging long-term investment.

curveship• 10 years ago

Wouldn't it discourage long-time owners from selling, thereby limiting supply and raising prices?

svachalek• 10 years ago

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 this has to do with the shortage of supply in the bay area but I'd be very surprised if it has "nothing to do" with it.

yellowbeard• 10 years ago

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)

kansface• 10 years ago

Prop 13 has nothing to do with real estate price inflation.

Its hard to imagine the current real estate inflation in the case where home owners had to pay taxes against the fair market value. In other words, home owners would at least see some value in new construction. As it stands now, there is only downside.

dragonwriter2• 10 years ago

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.

As I see it, the long-term expected costs for a purchaser with an average expected time to hold are neutral compared to an equal-revenue scheme that didn't favor long-term property owners over newer property owners. (Given the same assessed value.)

OTOH, the future costs of holding property are lower compared to the same alternative for current property holders (since, even with a short holding period, some of the early, highest-relative-tax-burden years are sunk costs under Prop 13) under the same comparison.

So, rationally, people are just as likely to want to buy property, and less likely to want to sell it once they've already bought it. This reduces supply and increases market clearing price.

ScottBurson3• 10 years ago

Prop 13 has nothing to do with real estate price inflation.

Yes, it does, because it incentivizes municipalities to encourage commercial development (which tends to change hands more often) over residential. It's a classic unintended consequence.

capkutay• 10 years ago

My solution would be to jack up the real estate inheritance tax and allocate that money for public transportation and affordable housing.

In Silicon Valley product management there's the saying 'for every yes, there's a thousand no's."

In housing politics for every good idea, there's 100k people who will complain and sue.

The only policies implemented usually fall under the following categories

1) Irrational populism.

2) A backroom deal pushed by lobbyists and their political allies.

Sensible ideas usually don't fall into those categories.

rb8082• 10 years ago

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.

gorkemyurt4• 10 years ago

But I am sure you paid more in income taxes in London. Which policy do you prefer? In my opinion taxing wealth is always a better idea than taxing income..

amyjess• 10 years ago

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.

talmand• 10 years ago

One of the reasons I had heard for some people wanting it is that some local politicians had figured out that they could manipulate housing valuations to increase their tax revenue. It's not in the list on Wikipedia and I'm not sure of the validity of it all as I'm not aware of what the practices actually are in California; but I recall reading about it back when Arnold first ran for governor.

michaelt• 10 years ago

  How are property taxes calculated in [...] London?

Properties are assigned to a tax band based on the tax office's assessment of the house's value were it to have been sold in April 1991. Bands vary from A (less than £40,000) to H (more than £320,000).

The council tax ratios between the bands are fixed - so a band A property always pays one third the price of a band H property. The band a house is assigned to is essentially permanent, although you can appeal if it's not in line with equivalent properties in the same area.

This provides certain desirable properties - more expensive properties pay more, but your bill doesn't go up just because house prices in your area go up.

Disadvantages are your tax bill can still go up - just it goes up for everyone by the same percentage; if an area has become much nicer (or less nice) since 1991, the council doesn't make any more (or less) money; and valuations based on a government employee's estimate of a hypothetical sale don't have the idealogical purity needed to really get the support of voters.

pjc502• 10 years ago

Another disadvantage is that it's regressive because the bands are quite limited: "The poorest lose 8% of their income to the Council Tax system whilst the richest only lose 2%." ( https://www.equalitytrust.org.uk/how-regressive-our-tax-syst... )

"Europe tells UK to reform ‘regressive’ council tax system": http://www.localgov.co.uk/Europe-tells-UK-to-reform-regressi...

btbuildem• 10 years ago

And this has exactly nothing to do with Vancouver..

biot• 10 years ago

In Vancouver, property tax is based on calculating the cost of the provided services, then dividing the cost over all the homes based on home price and adjusted for and a few factors such as location. Every home is assessed annually, which becomes the basis for how much tax you pay. Theoretically, if the cost of providing the services were constant and all home values increased at the same rate, your property tax would never change.

louprado• 10 years ago

A Canadian who invests in single-family homes recently told me that the U.S. state of Indiana charges double real-estate taxes if the home is not owner-occupied. As a Californian who owns rental property in Arizona, I am all in favor of this, provided that means my primary residence would be taxed less.

Real-estate taxes on your primary residence is the equivalent of paying rent. It has become so high in some states (e.g. Oregon) that it discourages home ownership.

matthewmcg• 10 years ago

Most jurisdictions have a "homestead exemption" that reduces property taxes on owner-occupied property (though not to half, as this policy does).

toast0• 10 years ago

California does give a homeowners exemption on property tax; but it's in the constitution at $7000 of value, so it's only a $70/year discount, and there's a lot of rules to follow if the legislature wants to change it, it looks like they have to also increase the renters credit, and be revenue neutral for local governments; I don't expect it's likely to be increased by legislative action.

FuriouslyAdrift• 10 years ago

Indiana also put a 2% cap on property tax into the constitution. Indy has some really nice Gilded Age mansions under $2 mil.

vkou8• 10 years ago

Renters pay property taxes, too - indirectly through their landlord.

brewdad• 10 years ago

Oregon's real estate taxes are modeled after California's. They are capped at 3% increase per year (in taxable value, increases in individual levies can lead to more than a 3% increase year over year).

My house is about 10 years old and I pay ~1.5% of it's resale value in taxes annually. Granted, that's much higher than my neighbor who occupies his childhood home built in the 1960s but it's hardly outrageous compared to other parts of the country.

One difference in OR, in addition to selling a home, a significant improvement (ie adding an additional bedroom) can lead to a resetting of the taxable value at current market value.

anigbrowl• 10 years ago

Another thing to keep in mind regarding prop 13 is that it also affects commercial real estate - commercial landlords tend to set up a company to own/insure/maintain a building, and then rather than selling the building they just change the beneficial ownership of the company, preserving the low property tax rates.

As a homeowner myself I'm being a bit hypocritical here because we bought at a low point in the market and now pay a fairly low rate of tax relative to the change in the property value, but on the other hand that outcome was the result of years of waiting for an opportunity to time the market.

shostack6• 10 years ago

Yeah, something to the tune of $9B in avoided commercial taxes from stuff like that [1].

[1] http://www.sacbee.com/news/politics-government/capitol-alert...

surfmike3• 10 years ago

It would make the law more complicated, but I think the property tax should be recalculated annually based on your property value but it should also be capped to a percentage of income. You could set a floor of the existing prop-13 tax rate. And ideally only the land value is taxed, not the structure on top of it.

brc5• 10 years ago

It's even worse in Australia, which most properties do not have a yearly property tax. So you pay a 'stamp duty' when you purchase the property, based on a % of the sale price.

This means you have people living in Sydney with multi-million dollar properties - which are just modest houses in now-desirable suburbs - who haven't paid any property tax since the 60's, and who can't move anywhere because they'd be up for so much stamp duty in one hit (easily 50-100k).

Furthermore, the state government has unpredictable revenue streams based on the ups and downs of the property market (you can have high prices but low volume) and the labor market is more calcified because people are unlikely to sell and move to access a new job.

The result is tightly held real estate, variable state government revenue and ever-higher prices. Adding fuel to the mess is a universal belief by local governments that housing development is evil and must be curtailed, so they concentrate on high density and infill development, which drives the prices of stand alone property ever higher.

Unsurprisingly, Australia just about outpaces Canada for the most severely unaffordable housing market.

And yet if you ask the average person in the street, they will blame 'interest rates' or 'Chinese buyers', and not once look at the ridiculous blockage on supply.

fleitz2• 10 years ago

Its the exact same thing here in Vancouver, there are even protests because someone is going to tear down a small house that fits one family and build a bigger house on the same property that fits multiple families.

We have a low interest rate fuelled asset bubble and 1%'ers are complaining that they can't afford detached housing in Vancouver, never realizing that if everyone in Vancouver live in detached housing we'd need 150% of the available land in Vancouver (like no roads, offices, parks, pools, etc just detached housing)

It's stupid to expect to be able to live in detached housing in a world class city. The other thing is that Vancouver isn't really a 'city' in the way that many others are, the 'burbs are separate cities so we get this 'most unaffordable' label when its really much better than many other cities.

CountSessine14• 10 years ago

And yet if you ask the average person in the street, they will blame 'interest rates' or 'Chinese buyers', and not once look at the ridiculous blockage on supply.

I think that this is the other dimension to the Vancouver housing problem that no one is talking about yet. Vancouver is separated from the rest of the province by the Fraser river to the south-east, and regional development policy for about 30 years has been fashioned to make it difficult for anyone to live south of the Fraser.

If we put more bridges across the Fraser and built more highways, I think most of this problem would go away on its own.

JoshTriplett3• 10 years ago

This sounds like an excellent argument for getting rid of property taxes altogether.

Property taxes have some major fundamental problems, not least of which that using them to pay for local services tends to make such services better in more affluent areas and worse in less affluent areas. They produce potentially unbounded and unexpected expenses long after paying off the house itself (which impacts retirees and others trying to predict future expenses). And on top of that, as mentioned in the comments here, attempts to control the growth of property taxes can create major supply issues in the housing market.

So why not get rid of property taxes altogether? Most states/countries already have either income tax, sales tax, or both. Why not settle on one tax, either income or sales, and use that for all government expenses?

ScottBurson3• 10 years ago

This means you have people living in Sydney with multi-million dollar properties - which are just modest houses in now-desirable suburbs - who haven't paid any property tax since the 60's, and who can't move anywhere because they'd be up for so much stamp duty in one hit (easily 50-100k).

I don't understand. When you're making millions on the sale of the property, how is 100k in stamp duty a problem? It's on the same order as your agent's commission!

goatforce5• 10 years ago

Aren't 'council rates' just a different name for 'property tax'?

http://www.cityofsydney.nsw.gov.au/live/residents/rates

eru4• 10 years ago

If only they would do high density! They could easily knock down all the small houses in eg Glebe and replace them with a few high rise condos.

throweway3• 10 years ago

Add to this the pension eligibility means test excludes your primary residence.

So if you sell your house to help fund your retirement then it is duely punished by missing out on money from the government.

Much better to refinance the house and live of that. Hence more tightly held homes.

rdlecler13• 10 years ago

Those house owning elderly you're feeling sorry benefitted from the biggest bull market it history. They may have saw 100x gains on their house while many youth will are spending 30-50% of their income on housing if they're lucky to get a good job. If they do, they can look forward to paying entitlements to these elderly people while they themselves may never see the same turn done to them because the system will be bankrupt by then. I don't see why the elderly should be any more immune to economic realities than everyone else. If you can't afford to live in your house or city any more, at least you had an opportunity to roll the dice and make the best of your life there. Others won't even get that. What about the people who will never afford to, people who might have made a positive net improvement to the economy if we weren't so concerned with protecting people. If it gets too expensive, let them sell their house and go live out their lives very comfortably in a low cost city and open the room for people who are going to contribute to the economy that has to pay for their entitlements.

rayiner5• 10 years ago

It's insane. The people who don't work live close to the business districts collecting social security paid for by the people who do work who have to commute in from afar for the privilege. Then the people who don't work vote themselves favorable property tax rules so they don't have to pay their fair share of keeping up the city.

DrScump11• 10 years ago

I can't imagine a single unimproved residence being anywhere in that neighborhood (even going all the way to 1978); examples are welcome.

pm246013• 10 years ago

You are attacking the wrong people. Prop 13 applies to business real estate as well. This is the true problem. Before Prop 13 business was paying 2/3 of the property taxes now business is paying less than 1/3.

The problem isn't the elderly, the problem is that Prop 13 includes commercial properties

surfmike3• 10 years ago

An expensive house doesn't make you richer unless you're selling it and live somewhere cheaper. And in our society it's a given that predictability of costs is one of the benefits you get from buying a house.

dghughes• 10 years ago

It's probably not as much as you think it is, what is the constant dollar difference?

If a single-family home in Vancouver cost $150,000 in 1980 and now it's $1.8 million it looks like a difference of $1,650,000.

But that $150,000 is equivalent to $411,000 in 2015 dollars so the real difference is $1,389,000 still a lot but it's nothing to scoff at.

chrismcb• 10 years ago

So what you are saying is the person who just spent their entire life, 40+ years helping build the city they live in, should now move away to a small city that no one else wants to move to? And they should do that mainly because other people now want to enjoy the fruits of the elderly labor?

ChristianGeek• 10 years ago

Nobody benefits from a bull market until they sell.

jpollock3• 10 years ago

How are property taxes calculated in... New Zealand.

1 The local government sets their budget.

2 Then a valuing company sets property values once every 3 years based on permits and local sales.

3 Then the mill rate (property tax percentage) is set at a rate to clear the budget.

Tax rates are stable as property prices increase. The only thing that wouldn't be under your democratic control would be if your neighborhood suddenly became very desirable, changing your house price substantially while leaving other areas unchanged.

If you cannot afford the tax bill, there are programs for low-income or retired persons to get debt forgiveness.

pmorici• 10 years ago

"This is such a hard problem to solve, no one wants to force elderly people to move"

Not really, in Maryland property taxes are reduced for house holds making under 60k and are zero for people who make under 10k. There are limits on the value of the home so you can't buy a mansion and then live in it retired and tax free but it protects poor people and old people.

ScottBurson3• 10 years ago

This is such a hard problem to solve

Actually, it's an easy problem to solve technically; the hard part is selling the solution politically.

All you have to do is, instead of capping the growth of the tax rate, you cap the growth of the required payment against the tax. If the tax is greater than the required payment in a given year, the locality gets a lien on the property for the difference; but, critically, that lien does not become due until the property is sold.

This system would let localities collect, in the steady state, as much property tax as they would have before; it's just that they wouldn't actually receive part of the tax on a given property until it was sold, so the money coming in would be a little lumpy. But that doesn't seem like a serious problem.

Anyway, the point is, if localities could still collect the amount of property tax on residential properties that they need, they would be more inclined to encourage residential construction.

It's been done in places, and it should have been done in California. Prop. 13 is destroying the state.

jernfrost2• 10 years ago

Oslo, Norway where I live is a pretty expensive city, but we don't have property taxes so that is not an issue.

But like Vancouver we have serious issues with the housing market. We have a green area around Oslo were you can't build on (that is where everybody goes skiing and hiking).

And we have the extra problem that due to being so far north we can't build high rises otherwise we wouldn't get any sun in the city in winter time.

But they have started turning a lot of old villa areas in to 4-5 story buildings. So densification is definitely a strategy being followed in Oslo.

DrScump11• 10 years ago

No, it sets your base tax value at purchase to 1% of the purchase/FMV price, and its increases from there are annual and limited to 2% of the previous tax.

e.g. assuming a purchase price in 2015 of $1 million:

Year Tax

1: $102,000 max

2: $104,040 max

etc. (initial * (1.02 ^ year#))

Or any other change in majority ownership. It can also be triggered by improvements.

Note that local governments heap many additional taxes in the form of "parcel taxes" that are fixed amounts -- a regressive tax effect (a $20M estate and a $300K condo pay the same amount).

nosuchthing2• 10 years ago

Incentive the use of land to facilitate more people.

Encourage / incentivize mixed use developments with affordable housing units.

Tax unused empty lots, empty apartments, low volume office buildings, etc..

Build affordable compact mobile homes.

verylongname• 10 years ago

Moreover, in most of California, the supply of housing has been artificially restricted using overly stringent zoning rules and laws. I'm in favor of reasonable zoning rules, but in my city the only justification for limiting new constructing seems to be existing homeowners who "want to live in a small town" and enrich themselves at the expense of newcomers who have little choice but to settle in the area for economic reasons.

marincounty• 10 years ago

Do you really think the housing problem in the Bay Area is the result of prop. 13?

The housing problem is multifaceted.

"Let's just get rid of prop. 13 today." Do you really think the price of realestate, or rentals will go down?

In my county, the county workers are already paid over $100k/yr. for picking up trash on our supposedly filthy trails. Our county workers are paid very well. Where I reside we have cops everywhere. You could remove 75 percent of them, and I don't think anyone would notice, except for the fees they bring in.

Howard Jarvis knew what government did with more money; they spent it on themselves.

O.k.--I'm not in the mood for this, but the housing crisis in the Bay Area is due to a lot of factors. It's a nice place to live. Your boss wants the best. I don't know why they picked the Bay Area. There's other nice places, with temperate climates? He wants only the best for himself, and his spawn. The best house. The best schools. The best car. And by golly, he only deserves the best?

San Francisco, and Marin county are not designed to scale. San Francisco has a better shot at growth than Marin, but I leave that alone. They can go up in S.F.? But I don't think that city will ever see real subways, and not because of money.

Some Bay Area residents are NIMBY'S. Some have good reason--look at 101 at 3:30 p.m. The sewers are old, and small. The streets are narrow. It's surrounded by oceans, federal parks, etc. It's not a vast area.

Local governments almost never approve variances. Sure they take the money, but never approve. It's very difficult to build in the Bay Area. It's almost like they go out of their way to curtail growth. I would love to build a small cabin. Twenty years ago my dreams were shattered when I tried. The kind lady at the planning department, said I'll take your money for the variance, but honestly-- they never approve.

When I was a kid Howard Jarvis wrote a book, called I'm Mad as Hell. My father was a new journeyman electrician, and when my father would look at that property tax bill yearly. My father was beyond disgusted looking at those rising numbers. Every year they took money, and spent it on Themselfs. My father was a conservative Rebublican, but was all for prop. 13, along with millions of Californians. Even though I was a kid, I could feel the anger among adults. The politicians had a little game back then; raise the assessed value one year, raise the tax rate the next. There was always the same loser in this games, and it was the guy who paid the taxes.

If you honestly think the housing crisis is due to prop. 13, read ISBN: 0-8129-0858-9 I'm Mad As Hell.

By the way, I'm disgusted with the housing situation along with everyone else. I don't blame prop. 13 though. A few weeks ago I heard a lady on the radio say, "I lowered my tenants rent $500 a month." Announcer, "Why?" Moral lady, "I was having a hard time looking at myself in the mirror."

specialist• 10 years ago

While Prop 13 is terrible, it's the not cause of the housing shortage (or bubble).

Land use policy is the cause, preventing supply to meet demand.

California’s High Housing Costs: Causes and Consequences

http://www.lao.ca.gov/reports/2015/finance/housing-costs/hou...

"Building Less Housing Than People Demand Drives High Housing Costs. California is a desirable place to live. Yet not enough housing exists in the state’s major coastal communities to accommodate all of the households that want to live there. In these areas, community resistance to housing, environmental policies, lack of fiscal incentives for local governments to approve housing, and limited land constrains new housing construction. A shortage of housing along California’s coast means households wishing to live there compete for limited housing. This competition bids up home prices and rents. Some people who find California’s coast unaffordable turn instead to California’s inland communities, causing prices there to rise as well. In addition to a shortage of housing, high land and construction costs also play some role in high housing prices."

Spooky23• 10 years ago

Prop 13 is certainly unfair policy, but is almost certainly not a causal factor.

New York is a great example of a place with runaway train property taxes and perennial housing shortages in the NYC Metro area.

Property tax escalation creates vicious cycles, vaporizing buying power and creating disincentives for property maintenance, especially in older houses and poor neighborhoods.

In those areas, government aid programs create a housing price floor, so property owners maintain the minimum requirements for habitability, run the property down to zero value, and walk away.

nibs2• 10 years ago

In Toronto it is based on assessed value. You get a letter each year with a fairly conservative estimate of the value of your home, and your tax is a flat percentage based on the line item in the budget (city, education and transit). Calculator: http://wx.toronto.ca/inter/fin/tax.nsf/tax?openform

yaroslavvb• 10 years ago

Vancouver is on the way to becoming the bar from the joke "nobody goes there anymore, it's too crowded"

falsyvalue2• 10 years ago

This article and thread hits pretty hard for me. I was born in Vancouver and I'm getting pretty worried that Canadian salaries aren't enough to live in Canadian city. To any of you living in Vancouver and working remotely, do you have any advice for getting into that?

cdelb• 10 years ago

Not a remote job per se - but my side project which pays me in USD is working out quite well since the Canadian dollar started sliding. The economics of a building small side project have improved dramatically if you can get paid in USD and live in Canada.

neptunespear9• 10 years ago

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 the lowest one will get for a place relatively close to Skytrain, not too far from downtown (e.g. Burnaby/New West), and in a clean, low property crime area.

More and more companies are paying $70K+ for new grads (something I wouldn't have admitted in say 2012), which is about $45-50K take home assuming you max out your RRSPs. Assuming a "35% of take home salary on housing" rule, you can afford rent of $1350-1450/month (higher if you gross more).

You can get a lot for that kind of money, like a big 1 bedroom (full lease) that's 15 minutes to downtown by transit. I dare you to find something similar in the Bay Area or Seattle, especially with commutes as short and crime rates as low as Vancouver's.

If you absolutely must live in the downtown core, studios start at $1000-1200/month in the West End. There is lots of shared accommodation in Yaletown for <$1000.

I was watching CBS This Morning on Wednesday on the Seattle channel (KIRO), and there was a story about the nuns having the rent on their soup kitchen in San Francisco increased by 50%. In BC, the provincial government restricts annual increases to 2.7% (for 2016) and Vancouver does not have a ward-based system of city councillors, limiting the influence of NIMBYs far more than in SF.

bdcravens• 10 years ago

Are these amounts expensive for a developer there? I pay $1150 monthly rent ($1600 CAD) for a so-so house outside of Houston.

neptunespear9• 10 years ago

You can live downtown or close to it without spending half your (dev) salary on rent. And you don't have to worry about gas, being stuck in traffic, etc.

falsyvalue2• 10 years ago

I'd say $750-1000 CAD is per month is on the low end. In general I find that renting near the train system is about $1200-1300 CAD for 1 bedroom, but that's on eastmost side of the city which is about 15-20 mins out of downtown (by train). Average dev salaries are maybe 60k CAD?

retbull• 10 years ago

I live as a developer in Seattle. Right now I live 45 min from downtown on a bus route with a roommate and I pay more rent for half an apartment than you do for your full one.

mjevans2• 10 years ago

Also in the Seattle metro area; rent here is just massively out of balance. There is a total lack of regional urban planning and competition in the form of sufficiently available housing to keep prices low.

All of that development went to the improperly supported suburban exodus movement of the 80s and 90s.

neptunespear9• 10 years ago

Sorry, to be clear, I'm not renting. It was just an example.

Jagerbizzle• 10 years ago

I'm a developer in Seattle that moved here from Vancouver. While rent isn't much cheaper here, the cost of living is lower and my net income is 50% higher now than it was in Vancouver, not taking the exchange rate into account at all.

After 3 years here I've now purchased a townhouse in Cap Hill. I could have never afforded the house I just purchased in a comparable Vancouver neighborhood.

kareemm3• 10 years ago

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 only reason for this is outside capital driving up prices.

wrong_variable• 10 years ago

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

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

tbirdx2• 10 years ago

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.

neptunespear9• 10 years ago

May I ask where you live?

CountSessine14• 10 years ago

As an established middle-aged software developer with a family living in Burnaby who cannot move now because of custody issues, I'm going to give you the same advice I give to all of the engineering co-ops I work with. You should move out of the Vancouver area as soon as you get your degree.

I don't think that you're ever going to have a problem finding 1 bedroom accommodations in Vancouver because that's what developers predominantly build. Eventually you'll probably want to get married and have kids, and then you'll realize that the GVRD has nothing for you.

The detached home market now largely belongs to rich Chinese immigrants who made their millions outside the country; you'll never be able to compete with these folks working in the Canadian economy and paying Canadian taxes. That will largely rule out Vancouver, Burnaby, and by the time you graduate, New West, Coquitlam, Poco, and Port Moody. This isn't even a matter of stretching anymore - this market is completely isolated from CHMC policy now because the prices are beyond what Canadian home buyers could ever leverage.

Developers have little incentive to build 3 bedroom family-friendly condos, so you'll have a hard time finding those, too. I wanted to buy one recently and it was going to cost about $700000. My current 2 bedroom would sell for about $400k, but I don't think that I want to stretch that far on a single income, even though it would mean I could get my kids their own rooms.

And really, is Vancouver so great? The mountains are nice, and the downtown is nice if you're young. But it's a trap for the young - through well-intentioned tolerance and bad public policy we've created a city that is hostile to young families. Live anywhere else in North America and you'll enjoy a more favourable cost of living and/or a better lifestyle.

I'd leave in a minute if I could.

kilroy123• 10 years ago

Why does / did the Canadian government let so many Chinese come in and buy property like that?

burnaber2• 10 years ago

Solid advice.

I moved to Vancouver shortly before the .com crash. Worked for a number of companies, primarily doing low-level system programming, climbing from 50K to 120K in 5 or so years and periodically trying to do my own thing. One of the attempts worked, got a good exit, at which point started looking at upgrading from our pretty decent Burnaby condo to a house.

Being a true nouveau riche, we scouted everything, including most expensive areas like UBC, Point Gray and West Vancouver, talked to the agents, looked at the building lots, spoke with architects - the whole shebang. It became absolutely crystal clear that the Vancouver real estate is just one big parking lot for Chinese money. And they don't just park them there, they also bring their gambling habits with them, constantly flipping what they have and perpetually warming up the prices. It is in-your-face obvious once you take a close look at what's going on. You don't even have to prompt agents to relay the stories of how they guide groups of Chinese government suits through dozens of properties, all of which they end up buying above asking. It is absolutely INSANE. As it is ultimately disgusting.

In any case, we looked around once again, said "fuck it" and moved elsewhere. Mountains and good restaurants can't offset the fact that you feel like a lower middle class even when you don't have to work ever again in your life.

It's a nice place when you are young, renting and have no attachments, but I would strongly discourage from trying to settle there on a more permanent basis.

neptunespear9• 10 years ago

Despite your persuasive argument, I like it here.

The US is broken, politically and socioeconomically. The Senate will block any bills for a constitutional amendment to get money out of politics, and a Constitutional Convention will mean all amendments will be on the line, including the 1st Amendment (libertarians will cry "freeze speech") and 2A (gun owners will cry "the gubmint is taking our guns away"). I really don't see a bright side to America's future. Canada has been a well-run country, even under Harper, and I am optimistic about what Trudeau Jr. will be able to accomplish.

Calgary represents everything that I think is wrong with Canada--sorry, Nenshi, I like you, but the people of your city are holding Canada back. (the CPC, putting the economic eggs into the oil basket, and so on.) Plus, Calgary has less dev opportunities than Vancouver since everything is dependent on oil and gas.

I don't like the weather in eastern Canada. The winters are too cold, the summers are too hot and humid. By the way, it's much more common to have sleet, ice storms and hard-packed dirty slush/ice than freshly fallen snow. The rain keeps everything green and the temperatures in summer rarely gets above 25 degrees. So much better than 30 degrees (with 40 humidex).

Toronto too sprawling of a city, and amalgamation (just like it did in Ottawa and Halifax) has pitted suburbanites against urban dwellers, as manifested in Rob Ford and John Tory. Also, the 905 belt carried Mike Harris (Ontario PCs) in the 90s, and his "Common Sense Revolution" permanently sabotaged Toronto's public transportation infrastructure.

Quebec is a beacon of corruption. Remember that SQ officer who wasn't charged for a fatal hit-and-run with his cruiser? Montreal is owned by the Mob. Mr. Sidewalk, the Big Owe, etc. The infrastructure is literally crumbling (like the Highway 19 overpass collapse in Laval in 2006) because of how corrupt the city of Montreal is.

I'm young and I don't want kids. I do not believe that yellow peril is the driving factor in housing costs. Certainly it's a factor, but no one can say how much of a factor it is without solid data. I'm staying, and you can't stop me!

vehementi7• 10 years ago

assuming you max out your RRSPs

As a side note, this shouldn't really factor into your calculations. Either way you're paying the tax

ISL• 10 years ago

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.

danieltillett3• 10 years ago

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.

maxlamb• 10 years ago

Looks like people are already doing that: http://www.cnbc.com/2015/10/30/why-investors-are-shorting-ca...

jbarham• 10 years ago

I lived in Vancouver from 2000 - 2005. Left when I got married and worked as a software engineer in southern California until the end of 2010. Got fed up waiting for the green card so moved to Australia (my wife is an Aussie) and currently live in Melbourne. Reading articles like this I'm very, very glad I chose not to move back to Vancouver. Sure it's expensive to buy a house in Australia, but rent is relatively cheap. We're paying $1700/month for a 3-bedroom house in a nice neighbourhood 15 minutes by train from downtown Melbourne. Now that we have 3 boys I would never consider moving back to Vancouver. Low salaries, very high housing costs and non-stop rain in winter. Makes no sense at all if you have kids.

simple212• 10 years ago

why don't the young people left Vancouver create a city of their own?

stolk• 10 years ago

...with blackjack and hookers! As a matter of fact, forget about the city.

ficklepickle• 10 years ago

I live in Vancouver. I rent half an old house built in 1941 on a big lot.

It sold twice recently, within a couple months, by the same realtor. They always collect the rent in cash, never issue a receipt. I know a racket when I see one, so I had to figure it out.

First, somebody buys a house in cash but puts it in somebody else's name, like a child or spouse. They get lots of mail sent there. This is to establish primary residence exemption on capital gains when the house is sold. They make it look like that person is living there, when it's actually being rented. Two untaxed sources of income: undeclared cash rental income and the inevitable capital gains on the sale.

As far as investments go, its a sure win. And I have reason to believe I'm renting one of these properties. It happens to work out well for me though cause rents pretty reasonable.

jeremyt• 10 years ago

Sounds to me the rent could be a lot more reasonable with a 5 min conversation.

riquito• 10 years ago

They always collect the rent in cash, never issue a receipt. I know a racket when I see one

Do you see that by not requiring a receipt you're helping that racket?

sergers• 10 years ago

i live in a subburb 30km outside vancouver.

have a 3000sqft house with a $600k mortgage.

my yearly income is 90k before taxes/deductions.

my mortgage is $2500.00 a month (a bit more than half months wage).

my property tax is ~5000.00 year

my house insurance is $1200.00 a year

my car insurance is ~$1300.00 a year

my city utilities is about $120.00/month

my car gas is about $400.00/month

my house natural gas is $150/month

my house hydro electric is ~$200/month

that just covers the necessities minus food.

i have friends who live in downtown core vancouver, paying the same as me for 600sqft condo.

that is more than half my gross income, very not affordable. thinking about relocating. can keep same position and just move remote... also had career change opps in dallas, ny, californa, etc at $120k+, better than here... but my whole family is here... my whole life is here.

tough decisions... always thought more money would lead me away, now lack of affordability will instead.

cdransf2• 10 years ago

This is becoming increasingly true of LA too. Unless you're rent controlled and have been there for a while the price for an apartment is further and further out of reach.

There's construction everywhere but the price of living in those new buildings is even more than the increasingly expensive older areas and a lot of new construction has begun with what seems like little to no consideration for its impact on traffic.

Perhaps developers and the city expect people to use the limited metro system and other public transit but few people, in practice do.

I can't be that upset though, my wife and I are leaving for the suburbs soon with no plans to come back.

There's a lot happening in LA in terms of the tech scene, but it's not enough to outweigh the overwhelming cost of attempting to put down roots there (home ownership is a largely unobtainable goal, insurance of all kinds is expensive, every neighborhood suffers from traffic congestion and on and on).

jgh3• 10 years ago

I know only one or two people who actually own their own place in LA. Everyone else rents.

Everyone.

cdransf2• 10 years ago

We've been rent controlled for 3 years or we wouldn't be able to be here now. I know one person that owns a place and everyone I know who's wanted to start a family has left.

thomasfl• 10 years ago

The situation is very similar in Norway's capital city Oslo. Single family homes all a round a small downtown. Crammed between the fjord on side and the great woods protected by politicians, it's runninh out of free space.

ksec2• 10 years ago

There are lots and lots of empty Housing from Tokyo, HK and Sydney and Vancouver, most belongs to Chinese investors. We have empty housing sitting here, acting as a way to park money and yet we have so many suffer from housing price inflation.

If we Tax of empty housing for prolong period of time, like 6 months, which should force the owner to rent out its place, balancing some of the supply and demand issue.

IT DOES NOT solve the housing issues. Far from it, but it is one fair way to get more money to government and stop the price hiking so much.

pedalpete• 10 years ago

Are Yaletown, Coal Harbour and Olympic Village area (I forget what it is called, I left the Sea-to-Sky a few years ago), no longer the ghost towns of towering apartments they used to be? Even with the growth of 30,000 people per year, I can't image supply being a problem at all.

Is there any really viable plan to get the foreign owned real estate on to the rental market?

Without affordable housing, Vancouver risks becoming an economic ghost town

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