Time to reform campaign financing and rezoning rules

Elizabeth Murphy
The Vancouver Sun

Increasing housing supply is often promoted by government, and vested interests, as the solution to the affordable housing crisis. In fact, the current record-breaking level of rezoning and development in the City of Vancouver contributes to property inflation that is making the city less affordable. We need other approaches.

The city’s consultant’s report confirmed that the city has sufficient capacity in existing zoning and approved community plans to accommodate supply to beyond 2041 at the recent pace of residential development. This was without including the new capacity created in the just-approved Grandview-Woodland Community Plan.

The city recently confirmed they are building way more than required in the Regional Growth Strategy, and are leading the region on permit approvals. The city says, “this data demonstrates that new housing supply is at record levels and exemplifies the fact that we are approving significant new housing stock.”

However, when real estate is disconnected from the local economy due to global capital flows, simple supply and demand economics no longer work. Increasing zoning has proven to create speculation that drives land inflation. This adds to the cost of housing.

So from this we can see there is no rush to force yet more zoning supply that does more harm than good. Solutions to affordability are complex and multi-faceted.

Although broader public policies regarding the social safety net, immigration and taxation play important roles in housing affordability, landuse policies are the focus in this article.

There are several planning principles that need to be followed to create a system that supports an affordable built environment.

Do no harm. Protect vulnerable people, cultural and heritage buildings, community amenities and the environment. Upgrade, improve and adaptively reuse good-quality existing buildings. Plan very carefully for future new development and implement incrementally to avoid land inflation.

Although not fully followed, these principles generally were reflected in the city’s planning process from the 1970s to 1990s.

The proposed freeway through downtown was stopped in the 1970s. Then “Local Area Plans” were created in the inner-city neighbourhoods of the West End, Strathcona, Mount Pleasant, Grandview, Kitsilano and Marpole. These were comprehensive participatory plans that included a planning office in each neighbourhood and a strong social planning role. They resulted in plans that were community supported, with detailed design guidelines, and they lasted intact until 2006, when Eco Density changed this direction.

Rather than embracing these area plans as models for future growth, the city embarked on a new direction of making increasing density the primary objective. It has resulted in renter displacement and homelessness at record levels. Many people are being economically forced out of the city altogether.

The signal to industry that everything is at play has resulted in older rental apartment buildings being bought for their redevelopment potential rather than rental income values. These apartments were mostly built before the Strata Act. Now that strata projects are so much more profitable, the older rental building stock is limited and important to retain.

Yet this older, affordable legacy is being dismantled by increasing zoning where these apartment buildings are mostly located. Since 2010, these recent community plans in the West End, Downtown Eastside (Strathcona, Hastings, Chinatown), Marpole, Mount Pleasant, and now Grandview, have led to land speculation, assembly, and the resulting inflation.

Although rate-of-change policies are intended to protect rentals, most replacement units tend to be smaller and more expensive. Affordable rentals lost. People displaced.

Similarly, transit planning signals massive upzoning along new transit lines. Dogmatic application of transit oriented tower development undermines local planning processes without reasonable consideration of community scale and character. Broadway west to Arbutus is reported as being in the midst of a “land rush” in speculation of a subway that has yet to be finally approved and is potentially decades from completion if funded. This is driving land values ever higher.

So the key to housing affordability is to slow down the industry’s expectations that everything is up for rezoning and development. Spot rezoning has become the new normal. This has to change.

Then, perhaps, staff will have more time to process the backlog of permits that is taking so long to get through an overburdened city hall. It should not take many months, sometimes over a year, to get a simple interior renovation approved, like many applicants are now experiencing.

It also increases cynicism in the electoral process when people can see that the big money going into political parties is coming from the same people who get large rezoning approvals.

Worse yet is that at the civic level, there is no requirement even for reporting donations between election years. So with a four-year term, three years of donations go unreported unless reported voluntarily.

Although provincial parties must report donations on an ongoing basis, there are no donation limits on amounts, or bans on corporate or union donations. Civic campaign finance legislation is under the control of the province, which is reluctant to make changes that would require provincial campaign finance changes as well.

So campaign finance reform, at both the civic and provincial levels, is essential to creating checks and balances that help to moderate housing prices by reducing the enormous political influence of vested interests on land-use policy.

In summary, there are a number of principles with checks and balances that need to be implemented to create a system that supports more stable affordable urban living.

These systemic changes, as well as other land-use options that will be discussed another day, are essential if Vancouver is to have a future as more than just a resort city for the rich.

© 2016 Postmedia Network Inc.

SHORT-TERM RENTALS: Promotion coincides with report to be delivered by city staff at the end of September

JEFF LEE
The Province

With more than 4,200 registered listings in the Vancouver area, Airbnb has been blamed for constricting an already squeaky-tight rental market.

But the company is still on the hunt for new hosts — and is now offering cash incentives for people listing their property for rent on its website for the first time.

In an email campaign circulating this week, Airbnb is offering $250 for first-time hosts in Vancouver who sign up and complete at least one booking by Sept. 30. It also put details of its plan on its website.

The company is the leader in short-term and vacation rental accommodation, accounting for almost 85 per cent of the nearly 5,000 active listings in Vancouver alone — which has triggered a review by city hall into how to limit its impact on rental housing. The city is currently experiencing a record-low rental vacancy rate of just 0.5 per cent.

Airbnb’s new campaign appears to be limited to the Metro Vancouver and Toronto areas, two Canadian cities where major concerns have been raised about the impact of the short term rental service on the general rental market.

Vancouver doesn’t allow short-term rentals of residential units for less than 30 days unless the owner operates a bed and breakfast. Despite the regulations, the room-rental service is popular with homeowners and some rental companies that list multiple units. 

In its promotion, Airbnb suggests new hosts could earn up to $2,309 per week if they rent out an entire house with two bedrooms. The company takes a three-per-cent commission.

In early July, Airbnb released limited data that showed its service has more than tripled since 2013, rising to 6,400 bookings annually in 2015 — including whole houses, rooms and shared accommodations.

The data, released in response to a city request for information, said that a third of the listings were between one and 30 nights in 2015, with another one in five being rented for between 31 and 60 days, and another one in five being rented for half a year. About 11 per cent of listings were rented for more than 60 days but less than 90.

A third-party review released by the city a short time later showed more than 5,000 properties listed as available for short-term rentals on 10 platforms, including Airbnb, VRBO, Owners Direct and Flipkey.

The city commissioned the review as one part of a city council motion in April to look at the impact short-term rentals are having on the availability and pricing of rental stock.

At the time, Vancouver Coun. Geoff Meggs called the initial findings “worrisome”.

The deadline for Airbnb’s new promotion, Sept. 30, appears to coincide with timing of a report city staff are expected to deliver to council. 

Calls to Airbnb and Meggs for comment were not returned by deadline.

© 2016 Postmedia Network Inc.

MLS figures show house sales in Metro Vancouver have slowed dramatically

Sam Cooper
The Province

The B.C. government says it is premature to judge the effect of its foreign buyer tax, even as figures show that sales of detached houses in Metro Vancouver have plunged since the tax was introduced on Aug. 2.

“It’s too soon to conclude how the real estate market has responded to the additional tax,” said a statement on Thursday from the ministry, which has been criticized for abruptly introducing the tax. “The intent is to slow the rate of price growth and cool demand.”

Postmedia News reported this week that MLS figures show sales of single-family homes in Metro Vancouver home plunged by as much as 86 per cent in the first half of August, compared to the same period in 2015. Sales drops were steepest in markets where foreign buyers are most dominant, such as Richmond and West Vancouver.

The question now is whether significant price drops will follow the steep falls in sales. Already, sellers of luxury homes have had to lower their asking prices, MLS shows.

Vancouver Point Grey MLA David Eby, the NDP housing critic, said he believes the government intended to shock the market.

“Of course, they wanted to cause a panic, and they’ve got what they wanted,” Eby said. “And the only question is whether they will see it through or back off if polls go against them.”

UBC real estate economist Tom Davidoff said he believes Victoria might reduce the 15 per cent property transfer tax to 10 per cent, which is allowed in the tax legislation, if Metro Vancouver home prices drop dramatically in coming months.

“When I was told about the tax my reaction was ‘Wow, that is bold.’ It was like a megaton bomb,” Davidoff said. “It is consistent with shocking the system, and it was a loud and clear message.”

As soon as the tax was introduced in late July, the Greater Vancouver Real Estate Board complained the government had moved too rapidly and without consultation.

“I personally was shocked. Everyone was,” realtor Steve Saretsky said. “A lot of people were saying ‘They are going to kill the market. What are they doing?’”

“When a tax policy decision is made, there may be those who feel that the timing of the change should be different,” the ministry statement said. “We’ve found that the fairest and most efficient date for a change is usually to begin immediately after, or as soon as possible after, the change has been announced.”

While sales dropped 82 per cent in Eby’s Kitsilano riding in August 2016 compared to August 2015, he said homeowners there still don’t believe prices will drop sharply. In an indication of the changing market though, one of the sales this month was of a house in the 4000-block of West 15th Avenue that was listed for $4 million, but sold for $3.8 million. In comparison, in August 2015 a nearby West 12th Avenue home was listed for $4 million and sold for $5.86 million.

While the consensus of Point Grey residents seems to be that the market will pick up in September, Eby said, “I talk to many people who openly say they want a crash so that houses reflect local incomes and they can potentially raise a family in Metro Vancouver.”

Eby said an NDP government would take other measures to regulate the housing market, including taxing property transactions for offshore investors who represent themselves on land titles as “students” or “housewives” and likely pay little or no income tax in B.C. The NDP would also set up a money laundering and tax evasion unit, which Eby believes would generate revenue through seizing real estate assets related to crime, and collecting back taxes.

Realtors who are optimistic that Metro Vancouver home sales will bounce back in September note that a 15 per cent tax isn’t much of a deterrent to rich offshore buyers who have paid millions of dollars over asking prices in the past year.

But UBC’s Davidoff said he thinks the tax could prove very powerful by signalling to offshore investors that B.C.’s reputation of being an easy place to park money with “few questions asked” is a thing of the past. 

“In my opinion, if you take away the foreign buyer, I don’t know how prices don’t correct from 25 to 50 per cent,” Davidoff said.

© 2016 Postmedia Network Inc.

Cottages and lots at spectacular value

REW

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Steve Randall
Mortgage Broker News

CIBC is confident that its mortgage book is not a huge risk even in the two hottest markets.

In a conference call following the release of its third quarter earnings, the lender’s chief risk officer Laura Dottori-Attanasio said that in Toronto and Vancouver its mortgage customers generally have higher-than-national-average credit scores while serious arrear rates are lower than the bank’s overall portfolio. At-origination loan to values are also lower.

Dottori-Attanasio said that even if there was a 30 per cent drop in home prices and unemployment rose by 11 per cent, CIBC would face losses of less than $100,000. She said that rather than being concerned about mortgages, the unsecured loan market poses more risk.

 Copyright © 2016 Key Media Pty Ltd

Vancouver might be cooling even prior to new tax

Ephraim Vecina
Canadian Real Estate Wealth

Fresh MLS data compiled by Canadian real estate brokerage Zolo revealed that majority of Metro Vancouver’s real estate segment is currently experiencing a significant correction, as predicted by OECD around three months ago.

The average home price in the City of Vancouver plunged by 20.7 per cent in the last 28 days alone, and 24.5 per cent over the last quarter—down to $1.1 million, Zero Hedge reported.

Meanwhile, the average price of detached homes dropped by 7 per cent over the past three months, down to $2.6 million.

Sales volumes have also seen similar falloffs, with only 3 transactions in West Vancouver in the first two weeks of August—a sharp 94 per cent decline from 52 sales over the same period in 2015.

These developments coincided with record-breaking vacancy rates in Vancouver’s commercial real estate sector, which reached 10.4 per cent as of June 30 according to Avison Young. The completion of six office towers totaling approximately 802,700 square feet by year’s end is poised to exacerbate the amount of empty space, amidst the ever-increasing costs of rental in the city’s premium assets.

Cadillac Fairview’s reported sale of a $4-billion real estate portfolio is emblematic of the trend towards withdrawal from the Vancouver market. The portfolio covers 14 assets in Vancouver and Richmond, including Canada’s largest shopping centers, historic buildings, and office towers.

Vancouver commercial properties have seen record prices over the past few months due in no small part to foreign demand, exemplified by the $1-billion-plus purchase of the Bentall Centre by the Chinese holding company Anbang Insurance Group.

Copyright © 2016 Key Media Pty Ltd

Stephanie Ip
The Province

A realtor has been suspended after it was found he had conducted more than a dozen sales referred by an unlicensed Chinese-language real estate website that offered Lower Mainland listings to foreign buyers.

Xiao Ming (Alban) Wang’s real estate licence was suspended for a year, effective Wednesday, by the Real Estate Council of B.C. He was also ordered to pay a $10,000 fine and enforcement expenses of $1,500 to the council, and complete a remedial real estate course at his own expense.

In an agreed statement of facts released by the council, Wang said he was approached in September 2012 by a former client who said there was an opportunity to work with an investor, identified in documents only as FN.

At a meeting in Richmond, FN told Wang she had plans to launch a Chinese-language website showcasing B.C. real estate. According to the statement of facts, FN told Wang she would introduce him to customers, many of whom had already decided which listings they wished to buy.

Between November 2012 and July 2013, Wang completed 17 property transactions referred to him via the website.

The statement of facts was signed in late June and the consent order was finalized in mid July. The details of Wang’s suspension were released by the council this week.

© 2016 Postmedia Network Inc.

FOCAL POINT: Each room has one piece that acts as a conversation starter for anyone who enters

Mary Frances Hill
The Province

McKinnon by Cressey

Where: 2102 W. 48th Avenue, Vancouver

What: 40 homes in a four-storey concrete construction building

Residence sizes and prices: 2 — 3 beds; remaining homes 1,410 — 2,400 sq. ft., $1.699 million

Developer and builder: Cressey Development Group

Sales centre: 3130 Arbutus St (between West 15th and West 16th avenues)

Hours: noon — 5 p.m. daily, except Fridays

At McKinnon, Cressey Development Group’s condo project in Kerrisdale, designer Scott Trepp and his team show a firm belief in the power of personality.

In every room at McKinnon’s display suite, they have placed one piece — a rug, a kitchen island or a dominant material —that acts as an attractive focal point, a conversation starter for every visitor who enters the space.

In the living room, that attention-grabber is a bold multi-coloured area rug that Trepp refers to as “the dramatic kingpin” of the area.

“We chose it for its richness of materials (silk and wool), its dramatic pattern and the injection of colour it provided to the space,” says Trepp, who speaks on behalf of his team of designers at Trepp Design Inc.

“Another element related to this piece that resonated with us was the pattern — it’s modern without being too minimal or abstract.  In fact, it elegantly straddles the gap between traditional and contemporary design.”

Cressey continues the tradition of providing its trademark CresseyKitchen, complete with storage that lines the walls, integrated appliances, a thoughtful layout for movement, a pull-out pantry — and that standout kitchen island.

The island stands out as a multi-functional space-saving attraction. For those who prize organized, clean kitchens, it’s a sight to behold: it includes a microwave oven, storage for dishes and cookware and a large work surface. The design team sees it as “the main anchor within the kitchen both from a functional and compositional standpoint,” Trepp says.

“Functionally, it is a serious performer in that it is a continuous and large work surface uninterrupted by appliances or plumbing, and compositionally, it provides a foundation for the expansive appliance and storage banks that surround it.”

In the master ensuite, the dominant theme is obvious: a uniform grey marble envelops the room with richness, completely covering the floors and walls.

“The colour tone of this particular stone is very soothing without being cold,” Trepp adds. “The polished finish offers another layer of depth and luxury.”

Elsewhere, the suite shows off the ways in which these condos come with the familiar perks of a family home, like a laundry room with side-by-side washer-dryers and a surface for folding. During the McKinnon interior planning process Cressey’s principals were clear about their desire for a dedicated area to reflect the relaxed vibe of the living room. Trepp Design Inc. answered that need with a small lounge space, decorated in soft, light neutrals, placed in a spot that is usually reserved for a patio. These spaces are usually quite underused, so it was perfect for “an intimate, loungey retreat,” Trepp says.

© 2016 Postmedia Network Inc.