I'm curious how this problem is unique to Vancouver. Berlin's real-estate values have risen some 40% in just the last 7 years or so. New York City, in the 10 years I lived there, had an enormous escalation in what you get for the same rent payment, even adjusted for inflation. Big cities deal with this all over, so how do they deal with this "problem," or is Vancouver somehow unique in other ways?
I mean, look at the Bay Area. They command some of the highest rents in the country, and many tech-sector workers are able to "get by" because of higher salaries from their employers. Of course, if you're not in the tech sector, you're forced to live in more affordable outskirts, like East Bay.
In NYC, they have fantastic transit, so if you don't live in Manhattan, you can still get to work relatively easily. That infrastructure investment has helped NYC maintain its desirability.
Meanwhile, Toronto has a similar problem to Vancouver, except we're building tons of condos. As long as you adjust your outlook to realize that you may only be able to afford a condominium (to buy or rent), you can make it work. Otherwise, you can move to the suburbs, but our transit is garbage, so good luck with that.
Of course, I've simplified my points and glossed over the nuances. But I think the solution is really:
1) Higher density housing (i.e. high-rise residential)
2) Much better transit
3) Options for affordable rent-subsidized housing in these developments
If you do those things, I think you'll make it easier for millenials to choose to stay, and still encourage a diverse community that's not made up of just high-income tech or finance workers. Places like Hong Kong, Tokyo, NYC, Singapore, and many more seem to be thriving cities, and I think those are the factors they have in common.
On a weekday, Caltrain stops going south between midnight and 5 AM. Bart going east shuts down around the same time.
In Manhattan, subways run all night to the different boros, Metro-north, the LIRR, PATH, NJ transit etc. run through the night.
People say NYC is expensive, and living on the upper east side or west village can be expensive. But plenty of safe, cheaper places are a 20 minute train ride from Manhattan, and even more are a 30 minute train ride (and so on). You don't get options like that in the Bay Area.
Toronto's transit is indeed pretty trash. I want to move down to the city but I'm split on whether to put in a down-payment for a condo or piss away my equity by renting. They say the condo market is very volatile right now. Not sure how true this is because I am not very well versed on the subject.
Hey there, I used to work in the condo industry in Toronto. If you had asked me 5-10 years ago if buying a condo was the right decision, I would have said yes. But now, absolutely not.
What changed is the respect the builders have for the people buying and living in their buildings. 5-10 years ago, condos were a bit more rare, so a construction company had to try really hard to make their condo appealing. They worked slower and the architecture was much more livable. Spacious units, sensible parking and elevators, and catchy amenities like pools and fitness rooms.
Now, they pump out condos like a sweatshop. Instead of 8 units on a floor, there are now 12. Instead of a pool, you get a gym, and instead of a fitness room, you get a yoga studio. Elevators that serve more than 30 floors are too expensive, so those 50+ storey condos need 2 elevators; one to take you from 1-30, and another to take you to from 30-50. Every single new condo in the last 5 years is in litigation with the developer due to issues with the building. Contractors like plumbers and electricians know the game now too, so every bill from a contractor will be $999 (regardless of work done) because anything over $1000 requires board approval. Without a strong property management team, I expect half of the condos will be bankrupt within a decade.
If you want to buy a condo, buy one in a building that is more than 10 years old. They will have sorted out the engineering problems by then and their budgets will be inline.
Heh,
Things I've heard about recently in Toronto new-build condos:
1) Mailboxes are in the basement, so you can't check on your way in.
2) Each unit having a loud spaceship/heat pump instead of one central one. Heat pump is leased, not owned by the unit, so you're paying $45/month in perpetuity. Maintenance not included.
3) Submetering of electricity, where a quarter to half of your bill is in the delivery charge from a random power company (times x units of the building, instead of one for the whole building and incl. it in condo fees)
4) New condo board isn't allowed to fix/improve various promised things until the builder fixes it. Builder waits for it to time-out for 3 years and then the Board has to arbitrate/mediate it with the Builder. Meanwhile, condo board can't touch it.
5) Builders signing exclusive contracts with telecoms, so you can't get service from anyone else.
6) Locks not keyed right, so residents' keys can open mechanical rooms/rooftop access
7) Gym on the second floor, so residents below feel like they're living in a bowling alley
Well, thank you for your perspective - I guess I won't be buying any property any time soon - or at least not until I do extensive homework. Thing is - as bad as the situation may look like now compared to 5-10 years ago - I'm just thinking of how much higher real estate prices will be 5-10 years from now. So if I want to reap any future benefits now looks to be the time. I just feel it would be really unlikely to get deals as good as we had a decade ago. I'd like for the bubble to just pop a little bit before I start thinking about purchasing a condo seriously though.
Vancouver is unique simply in the degree of unaffordability. After Hong Kong, its housing is the most unaffordable in the world.
The elephant in the room is why this happened. Everyone talks about "foreign speculation" but in fact most of it is not speculation at all. In mainland China, Vancouver is widely viewed as a nice, quiet small city, good for students and the elderly. It's not a place for "real" work. So they buy homes there to live in part-time. It is quite normal to have the mother and child live in Vancouver while the father continues to work overseas. They pay almost no Canadian tax as they have no Canadian income. With their child in school, the parents can eventually claim permanent resident status thanks to the family reunification program and they can expect to retire in Canada. It's a big win for them and they see nothing wrong with it.
To summarize: introducing vast income inequality has distorted the Vancouver housing market and drastically altered the demographics of the city, making it unaffordable for the people who actually work and pay taxes there.
I think Vancouver's problem is that they don't have a strong economy otherwise. Berlin and new York are bad but at least they offer well paying jobs. That's what I gathered from a coworker who used to live in Vancouver.
Exactly. I'm currently working as a software engineer here, and the average wage is significantly lower than what Seattle companies offer (even if you ignore the difference in exchange rate). This combined with the housing affordability crisis makes it easy to leave.
> Big cities deal with this all over, so how do they deal with this "problem,"
As far as I can tell, they simply don't. I don't think there is any city that "deals with it", or even tries to, in any way.
Every city I can think of that has value in living in, is experiencing explosive bubble-like growth in them. Even the supposedly "cheap" or "low cost of living" cities are undergoing this process.
I think most cities secretly want this to happen, since it leads to higher property taxes and drives out members of their community they consider less desirable.
I moved to Berlin recently from Sydney. My rent is 60% of what I was paying in Sydney, and for a nicer apartment. I can't believe more people aren't moving here.
(Maybe I shouldn't say so. Keep the secret to those who know.)
And while rents are still cheap compared to other large western cities, they went (and are going) through about the same curve as these more expensive cities - it simply started lower here.
Well, as someone who's considering Australia and NZ as potential destinations, both language and visa situations are big hurdles to clear for moving to Berlin.
Maybe you have an European or U.S. citizenship, but they're harder towards South Americans. Also, software development salaries weren't something to write home about last time I checked (that was some a long time ago admittedly).
Edit: According to Glassdoor, Berlin Software Engineer Salary: €48000 (average)
So, not worth jumping through all the extra inmigration hoops compared to Australia or New Zealand, not to mention the language barrier.
My grandfather was German-born and they didn't grant the citizeship to him, and I remember the ridiculous requirements he faced trying to get it (and he was more German than most actual Germans, a Fischer Reuter Spangemberg and more German surnames all the way down)
"The paperwork is nightmarishly complex and requires a wealth of information, with endless pages and extra documents. Sometimes translations are required, sometimes not. In fact, she no longer sends the papers off without consulting an expert. Anders works as the human resources manager for Adidas. She is looking for skilled workers in Europe, the Middle East and Africa. These days, even a company like Adidas rarely finds new employees in Germany, especially IT experts and designers."
Yeah I guess it depends on your situation. For us it was a lot easier due to EU freedom of movement laws. It just sounded funny ("funny") cause it always seemed so much easier than moving to the US when I looked into it.
I also know a lot of Israelis who got German citizenships via their grandparents, but there might be special rules that make it easier for victims of the nazis (and their descendants) or people that fled the country.
Either way the salary is probably never a reason to move to Germany (I don't think wages are higher than in any other western country), I meant more like that it's not a reason NOT to move in that particular example.
I've lived in Boston, DC, NYC and London for extended periods of time, and spent a stint in Berlin. It's tech scene is awesome - if you find the right group of people it feels like CCC year round. It's art, music and food scene was an amazing value for the money when I was there circa 2011.
I'm guessing the equivalent of their hipsters got wise to it and drove up prices a la the gentrification you saw (compare the between the dirty-grimy NYC of the "Taxi Driver" 1970s vs the clean power-tie NYC of the 1980s bond-trading years, or the early 2000s Williamsburg where the rent was somewhat reasonable vs 2010 where anything on the L costed literally 3 times as much because every white kid with a fixie had his parents pay his $2600 rent, etc. $800/mo on a split isn't too bad for Boston if you're anywhere close to a decent spot on the T, considering the supply/demand (it's arguably the biggest college region in the US - between Cambridge, Boston and BC in Newton it's probably the densest student:non-student ratio in the US). Berlin had that vibrant feeling that's hard to explain but yeah the tech scene was (and hopefully still is) spectacular, especially re: the hardware hacking scene when I was there and it's certainly worth a visit.
Edit: http://ccc.de/ In math if you solve something major, odds are you'll wait till that years AMS Symposium to present; if you crack the PS3, CCC is where fail0verflow went to present. (Don't write them off because of their l33t-name, these guys aren't script kiddies -- these hacks are worthy of PhD theses if you see the detail of reverse engineering they go into.).
Over the last five years, the Canadian Dollar has declined more against the Yuan than the Euro or USD. It is mentioned in the article. I think that explains why Chinese investors purchase more property in Vancouver than say, Seattle.
The trend of foreign investment in the Vancouver market has been occurring well before the slide of the CAD. The immigration regime in Canada is much friendlier to foreign nationals, and especially so if they are wealthy. Until 2014, the federal government had an investor visa program that offered a route to permanent residence and citizenship in exchange for $800,000 investment (not in real estate) and demonstrable assets of $1.6 million.
I live in the Maryland suburbs of Washington, DC. Real estate in DC is very high and did not suffer as much in the Great Recession, due to the extremely limited supply of available housing. But I don't think our problem is foreign investors. Many people who moved into the burbs in the 80s and 90s now want to move back, as DC becomes more desirable. I see young people everywhere, even though it's hard for someone just starting out to buy here. But because DC can't physically grow as a city, it becomes harder and harder to find places for new housing.
Out here in the burbs, it's a different story. A development just down the road from me suffered very badly in the downturn, with houses losing as much as 50% of their value. Some of those owners will never be above water on their houses. I'm very glad I chose not to move from my townhouse into a single family home a decade ago, as prices soared, even though I really wanted a place with a mad scientist basement workroom. And as my friends retire, most are moving to warmer and/or cheaper places.
Berlin is in a pretty unique situation. It was a city where most buildings stood empty and with few jobs, especially in the high paying sector. The only pull factors were low cost. This changed only slowly after it became the capital again.
I'm in London now but used to be in Auckland. 40% over 7 years sounds blissfully slow after the insanity of Auckland - a city facing a very similar situation to Vancouver.
Berlin is unique in that this city has some very tough housing laws. You're better off being a renter than an owner. Because of that flippers and investors have shied away.
I can't remember where I heard but the city controls the rental rates. Don't want to pay more for a property than you can recoup. And you don't want to leave it unoccupied less you come back to find it squatted; and they have rights as well.
Because it is so highly regulated its not a great investment.
Vancouver is not unique. Similar problems exist in many cities around the world. Vancouver today is a more vibrant and economically diverse city than it has ever been. The conversation over the direction of the city is contentious pitting the old guard against the new guard, the haves vs the have nots. I would say San Francisco and Seattle have similar issues. And like you say, Berlin and Munich probably have similar problems. Although I'm not sue if Germany is seeing similar large inflows of Chinese capital and immigration.
