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Many cities around Vancouver region pondering impact of “dark houses/condos” and foreign or investor capital

November 12th, 2015 · 5 Comments

An interesting debate broke out at Metro Vancouver’s planning committee meeting last Friday, which I followed up on this week.

It started with a report on affordable housing or, rather, the startling lack of it in the region. There are lots and lots of apartments being built, theoretically enough to house all the newcomers who arrive every month. Problem is, most of it is priced too high for the lower-income people who arrive. There was a 6,800-unit shortage in the 2011-2014 period.

Michael Smith of West Van then proposed a stiff tax on properties that are left vacant, which he said are eroding the sense of community there. He said he pays high taxes on his Kauai property ($20,000, he told me later) because he is a non-resident and that could be applied here. (Links to maps on “dark census tracts” on the page turn.)

It wasn’t totally clear whether he meant anyone who leaves a house vacant for a lengthy period or only non-Canadian citizens or anyone who is using a property as a second home or what. But his point was clear. (Andrea Reimer from Vancouver did challenge him on how he knew whether they were owned by foreign investors, saying he seemed to have information that no one else in the city does. And people say local-government meetings are boring.)

But Richard Stewart from Coquitlam said it’s not such a bad deal if people want to buy places, pay taxes, and then not use the services. The city ends up the winner, he suggested.

Other mayors I contacted later had a variety of opinions. My story is here.

Linda Hepner in Surrey sees the investor or foreign capital, not sure which it is, as helping build the downtown Surrey wants. Richard Walton says the dark houses are starting to show up around Edgemont Village and above in small numbers, but he doesn’t see how any government could figure out what to tax and what not to. (He has a friend in West Van with other homes that he spends much of the year at. Should that person be taxed for not residing in West Van long enough?)

Malcolm Brodie in Richmond said he’s been hearing complaints on this issue for 30 years but also can’t figure out a workable system for taxing the right group.

The discussion continues. And, for all those who asked, here is the map that shows unoccupied dwellings in the census, or “dwellings not occupied by the usual resident.” This is compliments of Jens van Bergmann, the programming-challenged reporter’s friend. And, as a bonus, here is his map showing the census tracts that had the highest levels of immigrants moving in 2006-2011, so I can facilitate a lot of amateur analysis.

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  • Mac Hartfiel

    People keep talking about taxing. What will that accomplish for lower-medium income people hoping to enter the real estate market in any fashion? It will only rise the total costs of owning these properties pushing prices further into the stratosphere. I also highly doubt those tax revenues would be used to effectively help first time home buyers enter the market. Isn’t the real problem and only solution with the city of Vancouver. They have all the power to encourage and discourage any type of building or development. Maybe the city should try boosting the supply/development of condos and town homes in higher densities for most cost-effective construction. The city needs to wake up to 2015 and develop neighborhoods and densities accordingly. The kisilano neighborhood plan is from 1977! How relevant is that plan and those FSR regulations? The city’s zoning districts need a massive overhaul. The market is based on supply and demand and the supply tap has been a painful, expensive drip, and the demand for our beautiful city is coming on waves from ALL OVER the world.
    66 west Cordova was a perfect example of what’s possible to be built allowing people to buy comfortable (not-micro) condos for under 300K.

  • peakie

    “Dark houses” / “dark apartments” are everywhere, but there is no determination of how dark, how long or reasons why.

    Next door is on vacation. Across the street has been turned to rentals, over the way is an unsold new build, End of the block is an unsold megahouse, to be flipped by distressed owner in Surrey, that was too expensive and badly designed with many tiny single bed sized bedroom.

    Overbuilding is one possibility, and that will REALLY show up when the economy tanks/falls and fewer are “buying” (financing) housing.

    In Portlandia….
    ” Experts say there’s a national “shortage of cities” as people seek out hip, urban lifestyles.
    Unlike previous generations, today’s college graduates under 40 — the nation’s largest demographic — are [6]moving in droves to neighborhoods in Seattle, San Francisco or New York, Portland economist Joe Cortright said.
    Linkname: Rising rents pushing out Portland’s young families, creative class | Seattle Times Newspaper
    URL: http://old.seattletimes.com/text/2027490768.html
    Date: Thu, 12 Nov 2015 19:13:35 GMT

  • peakie

    But 66 West Cordova was an abject failure in getting below-market people into housing. And it involved the VanCity Credit Union which often makes “progressive-side” mistakes. But tangling with Ian Gillespie and the loud trumpeting of the unctuous Michael Geller on the unique ‘no parking’ element made it seem virtuous to the naïve.

    Cheap Condo Experiment Fails to Live up to Hype
    Planner finds result of Vancouver project ’embarrassing’ as buyers flip for profits. By Ian Holliday, 8 May 2014,
    TheTyee.ca

    thetyee.ca/News/2014/05/08/60-West-Cordova-Condo-Experiment/

    early buyers who got a great deal cashed out shortly after the
    one-year limit, turning profits as high as $74,000 on their “affordable”
    units. Others have begun renting out their units. According to data
    gathered at the BC Assessment office in March, 16 per cent of the condos in the building are no longer owner-occupied.

    Even to those who stayed, 60 West Cordova now seems like little more than another condo project in a gentrifying area.

    And searching for 66 West Cordova these days shows many suites for sale and some at $1800 (plus fees) as rentals. I suspect that they are also on the AirBnB-like sites at $250 a night.

  • Mac Hartfiel

    To call it a failure is just wrong. In the dream world the article is written from, condos could be built and artificially kept at an “affordable” price for years to come. That is not market housing. All I am saying is that 90+ people got to purchase real estate in Vancouver. Many of those 90+ people would not have been able to enter the market in any other way, and would still be renting to this day. That is a success if you ask me. Helping 90+ people enter the market and profit from their investment is better than giving zero people that opportunity. The alternative/status quo is needing military like tactics to navigate our cut throat rental market, as each purchase opportunity seems slightly smaller and less affordable than the last.

    The development wasn’t perfect, but It was absolutely a step in the right direction, and an example of what Vancouver needs much more of. The restrictions the building came with (min 1 year hold and a building maximum of 40% rentals) have great intentions and certainly helped create ” a sense of community and unique feel among the residents” according to Brian Higgins. But they of course, could have gone further to deter pure-flip buyers even more so. Making is 2-3 year minimum hold for example.

    Mr. Edelson, despite the headline, compliments the project to say “To try to bring [costs] down toward $250,000, that’s a pretty big achievement in itself. How to keep them down was the critical issue, and they didn’t quite get there. But the next one, I suspect, will. It’ll have to.”

    The fact that those price points were offered for new condos (not micro, and many with balconies and laundry) By Westbank and Henriquez & Partners (who I’m sure neither did the project for free) is an accomplishment. Vancouver has more than enough +400K 1 bedroom condos being built (with Miele appliances, yay!) This is not practical for the average working Vancouverite. I think this project should be applauded and encouraged to repeat and further the same intentions all over the city. Helping a few is better than helping none at all.

  • peakie

    Why are so many British homes empty?
    bbc.com/news/magazine-34930602#sa-ns_mchannel=rss&ns_source=PublicRSS20-sa

    By Justin Parkinson, BBC News Magazine 02 December 2015
    ….Despite widespread anxiety about a shortage of housing supply, there are 610,123 empty homes in England, according to the government. Of these, 205,821 have been unoccupied for six months or more, the official definition of “long-term” emptiness.
    In September last year, Scotland had 31,884 long-term empty properties. In Wales, 23,171 were empty for six months of more during 2014-15, the Welsh Government says.
    ….However, buy-to-leave, centred around London, accounts for a small percentage of vacant properties. More often, according to the charity Empty Homes, it’s because of more ordinary financial concerns.
    “One of the most common reasons that properties are empty is because the owner cannot raise the money to do the property up to let it out, or sell,” says Helen Williams, chief executive of Empty Homes. “Perhaps they previously rented it out and it now needs more works done to it, or maybe they inherited it.” If property is jointly inherited, it can take years for beneficiaries to decide what to do with it, she says.
    ….Councils can charge owners 50% extra in council tax if owners leave properties empty for two or more years – a deterrent for many, but by no means to the wealthiest investors.
    Another power is a compulsory purchase order, applicable only if officials can show they’ve tried to encourage the owner to bring a building back to “acceptable” use.
    ….So, in 2006, the Labour government brought in Empty Dwelling Management Orders (EMDOs), allowing local authorities in England to take over the management of some residential properties that had been empty for at least six months and where there was “no reasonable expectation” of them being occupied in the near future.
    By 2011 only 64 applications had been made and 43 had been granted across England. However, the coalition government changed the law so that a property had to be empty for at least two years before an order could be issued, arguing that it was undermining property owners’ rights.