Speaking notes for Michael Geller
Development Industry perspective on housing affordability in Vancouver.
1. Vancouver has always been an expensive place to live, but the current situation is unprecedented and now a crisis situation.
2. Most of us know that Asian money is a very significant factor. But we also know that additional taxation is not THE answer, and could result in unintended consequences.
3. Taxing empty houses and apartments sounds like a good idea; but will be complex and ineffective, and not likely to happen. But we’re watching what’s happening in Israel and other places.
4. Nearly all of us think that increasing supply is a key to the solution. We know that where there is a lot of supply, prices have not risen as much. I own a condo in Burnaby that is not worth much more than I paid in 2006. It is not an isolated example.
5. Supply solutions? Check out my SFU presentations. But they include new forms of housing: smaller houses on smaller lots; more duplexes and semi-detached; more townhouses including fee-simple; stacked townhouses; zero-lot line development; building on parking lots, along laneways, above institutional properties, above and beside industry; new forms of tenure; new attitudes
6. Prices will not always keep going up.
I would like to conclude with some practical advice to those in attendance:
1. WHEN TO BUY? My first bit of advice was something told to me when I was still at university.
While hitchhiking to school, I was offered a ride by someone who warned that he had to make a few stops. I soon realized he was picking up rent cheques. He asked me where I lived and if I owned my property. I was 21 and told him of course not. He told me to buy as soon as possible, and not to worry about paying too much because in the long term, the price wouldn't matter.
2. If I couldn't afford a place of my own, buy one with one or more friends. Foolishly, I didn't take his advice until 11 years later.
3. WHERE TO BUY? In terms of where to buy, I suggested that the best investments are often in the worse part of town, OR where others are not buying.
I reflected on how many years ago I used to tell people to buy in the Downtown Eastside, other parts of East Vancouver, Maillardville (Coquitlam), New Westminster, and Squamish, I still regard these places as good investment areas in terms of potential upside.
4. WHAT TO BUY? NEW or USED In terms of buying new or used, I recommend buying older condominiums, rather than presale units. While we don't talk about it a lot, in some parts of Metro, new units are like new cars; they depreciate when driven off the lot.
5. HOW TO PROTECT YOURSELF BUYING OLD? However, if you are buying an older unit, do not buy into a project that has not completed a depreciation report. While some are being prepared by firms that are not qualified, and too lax, others may be overly conservative. I think this is fair comment; however, I stand by my advice. If buying into an older building, it is important to see if it has been 'rain-screened'.
6. WOOD OR CONCRETE? On whether to buy wood frame or concrete, as a rule I prefer concrete, noting the premium is often not as high as it should be. If buying into a wood frame building, it is best if it has roof overhangs. If not, it is likely to leak again
7. LITTLE THINGS TO LOOK FOR? . When looking at a unit, examine it carefully. Too often people buy, especially in this market, without checking to see if there are enough electrical outlets, closets, or furnishability.
Also check to see if there is a lazy-susan in kitchen corner cupboards. If not, don't buy. If the developer is trying to save a few dollars here, where else has he tried to save money?
7.RENTING? If you can't afford to buy, you may need to rent. As a general rule, while rents may seem high, they are often a good deal compared to buying. I have found that many new laneway houses rent for much less than I think they should, given all they have to offer.
Worry about things like RENTBERRY.COM
IT IS NOT A SECOND CLASS FORM OF HOUSING. SWITZERLAND, GERMANY….
8. CAR? Finally, I told anyone who still hasn't bought real estate who has a car to sell it. When one compares the cost of operating a car over 10 years, with what the same money will do if invested in real estate, you're much better off without the car. Join a car-share instead.
9. ALTERNATIVE TENURE? ‘Rent to Own’ Shared equity: Shared Appreciation Mortgages Co-housing, COOPS
10. Write a letter with your offer!
Don’t put off having a family because you can’t afford a home; it’s better to have an family and move!
