Vancouver’s “worst nightmare could come true – ending up as a resort city” with only wealthy foreigners owning property, if the city doesn’t rezone large tracts of land to boost supply and ultimately reduce house prices, Bob Rennie told more than 1,000 people May 22.
Speaking to a sold-out room at the Hyatt Regency Hotel for his annual Urban Development Institute address, the man known as Vancouver’s “condo king” reiterated his stance that the only way to solve affordability is by increasing supply – on a large scale.
He also identified 19 factors that he says exist in Vancouver and are working against housing affordability:
- Zero ability to create new single-family housing lots
- Record high land costs
- Rising construction costs
- Upset community groups (rightfully so) restricting development
- Population growth
- High consumer expectations
- $1m single-family homes on brink of extinction
- Aging population
- Billions of dollars in existing equity propping up market
- Increasing wealth transfer helping with down payments
- Overseas investors – not just from China
- Zoning that restricts density
- Increasingly insular society
- Shortage of head offices
- Higher taxation but fewer services than other cities
- "Nameless, faceless blogosphere" of opinions that are not based in fact
- Court involvement in the politics of density
- Culture of wanting to live where everyone else does
- Less reliance on the car.
However, he strongly criticized the affordability reports carried out by economists and financial institutions (like the one by Vancity issued May 21) that compare high average house prices with average local incomes, saying that only 80 per cent of local housing stock is relevant to local incomes. Within that 80 per cent, there is a lot of inventory that is affordable for those with average local incomes, he said.
Rennie warned local buyers against being put off entering the real estate markets by these kinds of affordability reports, saying that to stay out of the market would exacerbate any existing imbalances.
“[Such reports] are sending local buyers to the sidelines while overseas buyers realize what a great place Vancouver is to buy in,” he said.
Although he identified foreign investment as one of his 19 factors affecting affordability, he downplayed its role in the local condo market, and told REW.ca the day before his speech that foreign ownership was only a major factor in the single-family home market.
Rennie told the UDI luncheon that he didn’t believe imposing taxes on overseas housing investors was the right move – a stance that echoes that of BC Premier Christy Clark, of whom he is a staunch public supporter.
However he did say he thought that it would be possible to create a tax on vacant homes, which could be used to create some kind of fund to help ease affordability for first-time buyers.
Rennie was speaking the day after he told REW.ca that if Millennials were upset about affordability, they needed to start becoming part of the solution by stepping up and getting involved in planning and rezoning processes.