Foreign ownership “the elephant crushing the table” of housing affordability: Brent Toderian, former planning director

ToderianInfo2(This post was originally made on 14-Feb-2013.) When it comes to housing affordability, foreign ownership is not only the elephant in the room, “it’s the elephant crushing the table.” Those are the words of Brent Toderian, Vancouver’s former director of planning at a keynote panel discussion on “Living Affordably in Greater Vancouver” at the February 2013 BUILDEX (convention on designing, building and managing real estate), at the Vancouver Convention Centre West. See further below for details of the panel.

Responding to a question from the audience about limiting foreign ownership, Toderian said it is “something the Mayor’s Task Force on Housing Affordability dropped the ball on. The competition between external demand and local demand — that’s the nicest way I can put it — is one of the reasons that, barring a collapse and a crash, we are going to remain a very expensive city to own in.”

Panel moderator, David Beers, editor of The Tyee, agreed, saying his publication tried to look into foreign ownership, but there is no clear way of measuring it. “So step number one might be to devise such a way,” he said. Another panelist commented that land speculation along the Cambie Line (Translink Canada Line on Cambie Street) is going to cut into a lot of the affordability that could have happened.

Speaking from the audience, Randy Helten, for CityHallWatch.ca, said, “The biggest take-away point today is that the largest elephant in the room is foreign speculation. We should all be asking our media, academics, public servants, and elected officials to put more attention into this. Other municipalities around the world have looked into this, have got the data, and have measures in place to deal with land speculation. The fact that ‘no data is available’ is not an adequate answer to that question.”

He also asked if the Short Term Incentives for Rental Housing (STIR) and other policies of municipal governments may actually be promoting speculation and inflating land prices, making our land less affordable. He cited a recent discovery that some bare land lots in the West End as well as sites just rezoned recently under the STIR program, and about to be rezoned (Beach Towers, public hearing on February 19, 2013), inflated in land value by 28% to 38% from 2012 to 2013.

In response, Toderian said, “The short answer is that some buyers are stupid …
there are always speculators and people willing to overpay. The STIR program didn’t create speculation. Speculation happens with or without the STIR program.”

2008 Mayoral candidate and founder of Business in Vancouver Peter Ladner builds on the topic of foreign money affecting housing prices, in Business in Vancouver on February 12, in “Fiscal reality continues to elude Vancouver real estate market.”

  • He writes that much of the imported money flowing into contenders for the “most unaffordable city”(Hong Kong, Singapore, Sydney, Vancouver),  is coming from China. He cites the January 20, 2013, Bloomberg “chart of the day”showing “an uncanny match” between China’s GDP growth and Vancouver’s housing prices.
  • He says other “most unaffordable” cities have taken steps to dampen investor demand. Hong Kong just introduced a 15% stamp duty on homebuyers without a permanent resident’s, card, and Sydney doesn’t allow foreign purchases of existing housing stock. (CityHallWatch has written on Hong Kong’s measures here.)
  • He cites the Mayor’s Academic Working Group on foreign investment in real estate [under the politically-appointed Mayor’s Task Force on Housing Affordability] having recommended that “the City learn more about nature, scale and impact of foreign buyers on the local housing market … prior to taking any particular actions.” ]The MTFHA, meanwhile, wrote off the need to look into foreign investment.]
  • Ladner concludes, “… until those on the losing end make some noise, our politicians and builders will focus exclusively on building more condos and imagining that one day, somehow, prices will magically align with local incomes.” [Update in May 2015: Eveline Xia of #donthave1million is exactly what Peter Ladner may have been referring to here. Is he a prophet?]

CityHallWatch notes that in a November 2011 mayoral debate on housing affordability, panel member Frances Bula asked: “If elected, will you look into the impacts of foreign investment on housing affordability?Both candidates — Gregor Robertson and Suzanne Anton — answered with one word: “No.”

CONCLUSION: As CityHallWatch has written elsewhere, it’s up to citizens (renters, owners, everyone) to initiate changes, as no one inside the system is motivated to do so. We urge everyone concerned about housing affordability in the Metro Vancouver region to ask media, academics, public servants, and elected officials to put more attention into foreign investment and ownership in our region. In fact, perhaps a failure of our elected officials to look into this matter (data, causes, solutions) may even be a cause for challenge under the Code of Conduct as an error of omission. Our civic system is failing us.

A summary of the panel is here. Many other interesting points were raised about housing affordability. Please read on.
Journal of Commerce (www.journalofcommerce.com)
February 14, 2013, 10:30 to 12:30, Vancouver Convention Centre West
Buildex Architectural Keynote Panel: Living Affordably in Greater Vancouver
Moderator: David Beers, Editor, The Tyee
Presenters:

  • Dane Jansen, Architect AIBC, R.A. State of Washington, LEED AP, Principal, DYS Architecture
  • Sean McEwen, Architect AIBC, S.R. McEwen Architect
  • Brent Toderian, MCIP, President of TODERIAN UrbanWORKs, President of the Council for Canadian Urbanism in Vancouver, former City of Vancouver Director of City Planning
  • Heather Tremain, Principal, Urban Fabric Group

Panel description:
This session provides a rare opportunity to dialogue openly with an expert panel of
professionals involved in the affordability of Greater Vancouver housing. Join
architects, designers, members of government, media, and advocacy representatives in
this spirited discussion. Discover what`s currently being done – and join the
conversation on what we might be able to do better. Is affordable livability in
greater Vancouver a real possibility or an ever-receding horizon?

Read full article on the keynote panel here: http://www.joconl.com/article/id54037?search_term=buildex

ADDED INFO:

Whether this is accurate or not, we note a Globe and Mail story (Real estate firm apologizes after employees pose as buyers in news stories, 14-Feb-2013) stating that “According to 2011 data by the Landcor Data Corporation, 75 per cent of those who purchased Metro Vancouver condos as investment properties are from Metro Vancouver. About 3 per cent are from the U.S. and 2 per cent are from other countries.”

7 thoughts on “Foreign ownership “the elephant crushing the table” of housing affordability: Brent Toderian, former planning director

  1. Just for the record, I didn’t use, and don’t use the term “foreign speculation.” Those were your words, Randy. I also didn’t say “foreign ownership.” I prefer the terms external vs local demand, which is why I chose those words.

    The truth is, it’s complicated, and both “external and local” are subjective terms… if someone from outside the city buys a home and lives in it or their children do, aren’t they local? If a local resident buys their second or third home as an investment property, is it any different than someone from outside the city buying homes for investments? It has the same effect on the market.

    What’s indisputable is that this all has a significant effect on demand, and needs to be studied. The answers though, are not simple, and any “solution” can easily cause its own problems.

    Brent Toderian

    • Thank you for the comment, Mr. Toderian. Yes, you did mention “external” and “local” demand. Also, right, it is important to distinguish between “speculation,” “investment,” and “ownership,” etc. For the record, I think that listeners would assume the subject of the “elephant” analogy was, specifically, “foreign ownership” (see quote below), after which you referred to the item as “it.” The flow of the discussion, from the sound recording is as follows…

      Question (woman at microphone): I would like to hear your comments on limiting foreign ownership as it addresses local affordability.
      Toderian: Great question.
      Other male panelist: I call that the elephant in the room.
      Toderian: I’m really glad you brought it up because I had it on my list. That is the elephant crushing the table. It’s not under it, it’s not on top of it. It’s something the Mayor’s Task Force on Housing Affordability dropped the ball on. The competition between external demand and local demand — that’s the nicest way I can put it — is one of the reasons that barring a collapse and a crash, we are going to remain a very expensive city to own in.

  2. Pingback: Beach Towers saga: City web page showing taxes, land assessment values mysteriously disappears | CityHallWatch: Tools for engagement in Vancouver city decisions, creating our future.

  3. From the January 29, 2013 South China Morning Post:
    “Hong Kong’s free market means we are open to criminals taking advantage of our liberal regime. While the government thinks it has put in place tight controls against money laundering and other illegal activities, prosecutions and convictions do happen from time to time. The recent conviction of the biggest laundering case in a local court underlines the need for better efforts to uphold the city’s fine reputation as an international financial centre rather than a haven to get rid of dirty money.

    It is shocking that a young mainlander from Guangdong managed to move in and out a record HK$13.1 billion with a local bank account over a period of eight months since 2009. At a rate of HK$50 million a day, he made 4,800 deposits and 3,500 transfers across the border through Chiyu Bank, most of which were done on the internet. The disclosure has raised questions over the vigilance of our banking system.

    When handing down a 10-and-a-half-year jail term, the district court judge described the case as the most serious of its kind. She rightly called for a review of the 14-year maximum penalty. According to police, the number of suspicious transactions reported to the Joint Financial Intelligence Unit in 2011 was 20,287. There were 17,795 reports up to September last year. It shows the city is an attractive place for laundering.

    The government regards our city as the region’s money-laundering policeman. Content with its regulations and vigilance, it is likely to brush aside suggestions that our regime is prone to abuse. But as China is expected to get tough on corruption and the declaration of assets for officials under the new leadership, there is a need for Hong Kong to guard against attempts to move ill-gotten money across the border.

    The last thing we want is to be billed as a haven for international money laundering. We cannot afford to have our reputation tarnished by illegal activities. The government should stay alert to the trend and adopt an open mind on tougher penalties to ward off law breakers.”

    1C$ = HK$7.75

    The tidal wave of funds from the mainland into Hong Kong is one of the reasons that the Hong Kong Government has instituted a 15% transfer tax on property purchasers who do not have permanent residence in Hong Kong. With real estate purchases limited for non residents in Hong Kong, Singapore, Australia and the UK the laundered funds seek investments further afield – like welcoming Vancouver. IMHO without some control of this demand prices will continue to rise in Vancouver no matter how many tiny new apartment units are built on side streets and alley ways.

  4. Pingback: Brent Toderian, Former COV Director Of Planning – “The competition between external demand and local demand is one of the reasons that barring a collapse and a crash, we are going to remain a very expensive city to own in.” | Vancouver R

  5. The distinction Brent Toderian is making by insisting on “external” rather than “foreign” is reasonable enough, especially given that “foreign”, in reference to the Vancouver real estate market of the past decade, has been code for mainland Chinese. There are significant numbers of immigrants from countries other than China also coming to Vancouver — people from India, the Philippines, Asian countries other than China — as well as healthy numbers of ‘invisible’, white-faced foreigners/migrants from the United States, Alberta, and Ontario. All of these people have the potential to affect the price of land and residential real estate.

    However, I disagree with Toderian’s suggestion that the cost of real estate in Vancouver is the result of “competition between external demand and local demand”, and that “it’s complicated.” On the contrary, I think it’s quite simple. The cost of real estate in Vancouver is not the result of competition between external and local demand, it’s the result of competition between wealth, whatever its origin, and lack-of-wealth. For quite some time, wealth has been winning, and in the last decade it’s turned into a rout. Toderian does make a similar point in the comment above, but it’s obscured by the external-internal construct.

    The elephant is not foreign ownership, the elephant is money. Who has it, who doesn’t, and what those with it are allowed to do with it.

    Here are two things I said on the Vancouver Real Estate Anecdote Archive a couple of weeks ago:

    It comes down to discouraging a necessity for the many (shelter) from being treated as an asset class and arena for speculation by the few.

    I think one role of government is to balance out income inequity, by regulating how much power can be exerted by those with wealth. I feel that Canadian governments at all levels have been getting away from that important function in recent decades. It all comes down to the kind of country we want to live in.

  6. Elephants notwithstanding, I believe that the horse left the barn long ago. The political influence required to maintain the status quo is well established given the size of Vancouver’s recently arrived immigrant community. They tend to view Vancouver’s real estate as a commodity for exploitation (just as many non-immigrants have always done). Any action to diminish the value of their investments would be resisted fiercely and I doubt very much that Vision Vancouver would have the political will or courage to initiate any such action. It really shouldn’t come as a surprise that Vancouver seems on its way to becoming more akin to the places from whence newcomers arrived. We lauded ourselves on being tolerant of their culture and real estate speculation is a part of it long-time Vancouverites were well aware of (in fact, they profited substantially from it) and chose to go along with to a point now where the laws of supply and demand are pushing them and, more particularly, their children into circumstances they never forsaw. They now have the option of living in much reduced but expensive space in the city or moving to the suburbs. The Vision Vancouver council is increasing the supply of multi-family development in the hope prices will drop but if this does, in fact, occur, a great many current owners will be placed in very difficult financial situations. It is, however, unlikely that immigrants will cease to find Vancouver attractive and they will continue to put pressure on supply for a long time to come.

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