Both the developers' letter and the letter sent by our group received considerable media attention. This prompted Douglas Todd to write about them in an opinion column.
Following the publishing of this column, Jas Johal invited me on his CKNW show to explain why I would sign a letter supporting the ban on foreign buyers when the developers had argued this was necessary. I told him that as long as lenders were insisting on presales, I did not oppose lifting the ban, but instead thought we should be pressuring lenders to relax their presale requirements.
Unfortunately, I quickly discovered how right my late father was whenever he told me we judge people by what they say and do, but expect others to judge us by our motives!
Douglas Todd opinion column
A clash of values is on stark display in two different letters that B.C.
property developers and a group of Metro Vancouver housing experts have sent to
Prime Minister Mark Carney.
The major B.C. real-estate developers, facing a cyclical downturn in
construction, this week delivered a coordinated statement to Ottawa and the provinces declaring
they have an urgent need for more foreign investors in Canadian housing.
Their letter came a week after a group of 27 well-known Metro Vancouver
scholars, retired city planners, urbanists, developers and architects sent
an open letter to
Carney and federal Housing Minister Gregor Robertson urging
the opposite.
“Do not reintroduce foreign capital or investor demand to reflate prices
artificially,” said the group of veteran B.C. housing experts.
“The current market correction presents an opportunity — not a threat,”
the specialists wrote. “Governments should not bail out speculative
housing development models, but instead use this moment to invest in non-market
housing, preserve existing affordability and ensure that public subsidies serve
long-term public outcomes.”
In contrast, the developers spelled out how foreign investment has long
been crucial to B.C. residential construction — largely because it has provided
the capital to start large condo projects, particularly hundreds of high-rises.
The developers’ letter, signed by companies such as Westbank, Wesbild,
Edgar, Amacon, Cressey and Polygon, readily
acknowledges the importance of a financial mechanism that many B.C. developers
have long tried to keep quiet: That many of their building projects have relied heavily on investors,
domestic and especially foreign.
In the past, many B.C. developers, condo marketers and their allies have
accused scholars and others who cite evidence of
significant foreign capital in the province’s urban real-estate of being racist and xenophobic.
Robertson, when he was mayor of Vancouver, once made such an
allegation against Prof. Andy Yan,
head of SFU’s City Program, who is one of the signatories to last week’s letter
to Carney, which was copied to B.C. Housing Minister Christine Boyle and
Vancouver Mayor Ken Sim.
However, now that B.C. developers are struggling with moderately
slipping prices — and dealing with how the federal, B.C. and Ontario
governments earlier imposed legislation to reduce foreign ownership — the
industry is being more direct about how it has long needed offshore financing
for its projects, often of the luxury variety.
“New condo development requires presales to
meet financing thresholds, part of which relies on investor-focused buyers,”
said the developers’ letter, which is titled “open” despite being watermarked
with the word “confidential”.
“In the absence of foreign investors, fewer projects will meet presale
financing thresholds, suppressing supply delivery, which serves no one in a
housing crisis as projects will not start.”
The B.C. developers, whose message is supported by real-estate players
in Toronto, say that if something doesn’t change, housing supply will continue
its slowdown. They argue that will mean, down the road, prices will again start
to rise.
The open letter from the more than two dozen housing experts — including
UBC’s David Ley, Patrick
Condon and Penny Gurstein, as well as eight retired planners for Vancouver and
Burnaby — takes a dramatically different approach to foreign investment,
housing supply and related issues.
In addition to urging Ottawa and provincial governments to retain
restrictions on offshore capital in housing, the specialists argue that governments’ aggressive efforts to
greatly expand supply will not ease Canada’s severe housing affordability
crisis.
The benchmark cost of a dwelling in Greater Vancouver remains stuck at
about $1.2 million, while in Metro Toronto it is about $1.1 million.
The independent housing experts say such unaffordability levels, among
the worst in the world,
continue even while housing supply has “increased significantly in cities like
Vancouver, where housing starts have outpaced population growth for decades,
yet prices remain disconnected from incomes.”
Many of the letter’s signatories have argued in recent years that
inappropriate, non-family housing is often getting built, particularly tiny
units that are mostly attractive to investors, foreign and domestic — that is,
people who plan to rent them out rather than actually live in them.
Developers, aided by city councils, are often “building the wrong kinds
of housing, in the wrong places, for the wrong reason,” says the experts’ open
letter.
That includes hundreds of new Metro Vancouver
residential towers, which they say the industry and governments
should not so heavily emphasize. “Towers have their place, particularly in
transit-rich areas, but they are not always the best form.”
Increasing housing density alone is insufficient to produce
affordability, say the experts. “Without addressing land value inflation,
financial speculation and tenure security, supply-side interventions risk
worsening the very crisis they aim to solve.”
On a positive note, the authors urge federal, provincial and civic
governments to retain and strengthen some policies that have proved effective.
“Recent short-term rental regulations, adjusted immigration targets and
demand-side measures have already helped reduce pressure on rents.”
Here are four more recommendations from the group of experts, some of
which go against the desires of developers:
• “Do not use public funds to bail out over-leveraged speculative
developments.”
• Avoid tearing down existing rental buildings, to replace them with
more expensive dwellings. “Preserve existing affordability, and build new homes
that serve real people, not just markets.”
• Return to policies of “growth pays for growth.” Governments should
again demand developers provide significant infrastructure and amenities in
exchange for construction approvals. “The costs of growth should not be
downloaded to municipalities, ie. local taxpayers.”
• Prioritize federal funds and grants for co-ops, land trusts and
non-profit housing.
Other signatories to the open letter to the prime minister
include: Larry Beasley, Vancouver’s former co-chief planner; Christina DeMarco,
former lead planner for Metro Vancouver regional district; Ralph Segal, former
chief urban designer for Vancouver; architect David Wong, previously with the
City of Vancouver; retired architect Barbara Gordon, former director of capital
planning for UBC; and one-time developers Michael Geller and Arny Wise.
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