Affordability and the World Class City

"According to the Bank of Canada, the average selling price of a home in Vancouver is now nearly 11 times the average Vancouver family’s household income"

So who's buying? What drives our sky high real estate market? It's a real failure of leadership that our ruling city council seem unwilling to have this conversation, let alone consider proactive solutions because it desperately needs to happen.

Sandy Garossino's recent Vancouver Observer Article Vancouver must tackle foreign home ownership problem head on follows on the heels of James Surowieki's New Yorker article in which Andy Yan describes Vancouver as a "hedge city" for global wealth. Garossino and Yan respectively are the former city council candidate / anti-casino activist, and UBC professor / urban planner who have been the veritable canaries in the coal mine for a number of years now, warning about our

The problem with the framing of this important discussion as an issue of "foreign ownership" is that it polarizes the conversation and evokes the spectre of xenophobia and racism (I've met both Garossino and Yan interviewed in this article and they are neither). Critics are typically quick to pile onto this argument, attempting to derail the discussion with the Godwin's Law of Vancouver real estate conversations: "that's racist!".

Ironically, more often than not, racism is evoked by those who wish to terminate the conversation, and often by those who directly benefit from Vancouver's real estate market.*

It might be more helpful to frame the discussion around "global capital": whether it's a Canadian mining executive with operations in South America, a Chinese businessman getting her money out of the PRC, an American millionaire investing cash into Vancouver's so-far bubble-proof hot housing market, or the long time local homeowners who have seen their property values multiply as a result -- our affordability issues are exacerbated by the injection of global capital into our housing commodities market.

The economists Joseph Gyourko, Christopher Mayer, and Todd Sinai have developed a theory about what they call “superstar cities.” Looking at data from 1950 to 2000, they found a small number of cities where housing prices rose steeply, and concluded that high earners tended to cluster together over time, with the result that rich cities tend to get richer.

Of course, globalization of real estate is not exclusive to Vancouver, and the notion of "superstar cities" has certainly benefitted local land owners and much as non-local investors. But one can't help but wonder if the oft-repeated aspiration for Vancouver as a "world-class city" isn't in fact some sort of clarion call for the moneyed classes of the world to invest here. Even if we take the more conservative estimate of 5.5% empty investor condos in Downtown Vancouver how does that effect the local market, whether they are owned by "foreigners" or not? What about the anecdotal empty monster homes abounding the west side? Whatever side of the argument you fall on, what is immediately clear is that we need a more detailed residency and housing audit, and we needed it yesterday.

This is a subject I will be covering in more detail on this blog and as the campaign unfolds. In the meantime, there an excellent suggested reading list on Andy Yan's BT|A Works blog.

* Predictably, real estate developer, PR and communications consultant Bob Ransford evokes the spectre of "veiled racism, bigotry and emotional reactions" and even the Chinese head tax in his May 30 response to the growing public desire for some sort of government response to the affordability/housing crisis: Any debate on housing regulation should begin with the facts