Vancouver has always had a pretty disreputable past when it comes to the real estate game of flipping properties for fast profit. Around the turn of the 20th century, even English writer Rudyard Kipling reportedly got in on the game when he visited Vancouver and purchased properties on Fraser Street, then known as Scott Street, as well as property on the North Shore.
According to Jesse Donaldson, author of Land of Destiny: A History of Vancouver Real Estate, the Jungle Book author returned to the rapidly growing city to find that he’d been scammed out of his investment. He’d purchased from a scoundrel named “Steve,” and insiders knew that you should never buy real estate from “Steve,” Mr. Donaldson said.
“The rules of the game haven’t changed, and the way it operates haven’t changed much at all,” he says. “The only question now is who is doing it and where they are from.”
Like many of his generation, Mr. Donaldson, a millennial, is angered by the affordability crisis of Metro Vancouver. The Richmond-raised writer says he has found security in co-op housing, and doubts he’ll ever own a freehold property. But he still wanted to know how he and many of his friends had lost the option to own. He wanted to help his generation understand how the gap between incomes and real estate prices got so absurdly wide. His book is the result, and it is one of two that came out in the last year revealing a dark side to a city that usually gets celebrated as one of the world’s most livable. Mr. Donaldson, for one, doesn’t buy into that hype.
After nearly a year of research, he discovered that the city’s cozy relationship with property development goes back to its founding, more than 130 years ago. Foreign buying and the local wealth and tax revenues made from frenzied development is nothing new. Foreign buyers from Britain and the United States flooded into the province from 1908 to 1913. In the building boom of 1912, there was one realtor for every 100 citizens, according to his book. Half of Vancouver’s city council were in the real estate business, including the mayor, an American-born realtor named Charles Stanford Douglas. That same year the city had revenue of $19-million from the issuance of building permits. He tells how politicians and Canadian Pacific Railway employees with inside knowledge made vast sums of money as they speculated on properties ripe for development.
He also details a federal loan effort to create semi-detached row housing for First World War veterans, bungled by the city when it instead promoted bungalows on private lots, sold at market rates.
“We’ve had an interesting approach in this country; allowing people to do stuff because they have a lot of money and [government] wants investment – but they don’t want to regulate those interactions in any way. And so, you get the mess we’re in now,” Mr. Donaldson said.
The beginnings of the current mess, he says, can be traced back to the 1980s when government began courting Asian wealth in earnest. One of Mr. Donaldson’s sources is University of British Columbia geography professor David Ley, who wrote about the government’s intentional courting of Asian investment in his book, Millionaire Migrants: Trans-Pacific Life Lines.
The Pacific strategy culminated with Expo 86, as “place marketing” for the Vancouver region, Mr. Donaldson said.
“It was a ton of taxpayer money that put on a big showing for rich people to invest, and they did. They were given supergood sweetheart deals that nobody else could compete with,” he said. “It worked very well, so a lot of the same people came together and did the whole thing again for the 2010 Olympics. They were basically two big marketing campaigns for the real estate industry.”
The federal government accelerated the process by launching in 1986 the immigrant investor program to wealthy foreign investors who could obtain citizenship in exchange. The program was shut down, but Quebec has its own program, which is temporarily suspended.
Despite Vancouver’s storied history of speculation, Mr. Donaldson says that the government lost control this time when it invited such tremendous foreign wealth, without regulation in place.
Mr. Donaldson says the “build-more-market-housing” approach the city has taken hasn’t worked. False Creek South, built in the 1970s and 1980s, is a widely praised model that achieved long-term affordability, but that involved all three levels of government working together. Since False Creek South, government has mostly left it to the market to supply affordable housing.
“What happens is no affordable housing gets built and they just end up lining their pockets with whatever subsidies they got. That’s happened multiple times. So if these strategies haven’t worked yet over 100-plus years, why would they start working now?”
UBC School of Architecture and Landscape professor Patrick Condon also published a book in the past year, called Five Rules for Tomorrow’s Cities, and although it’s more of an examination of the design of cities amid demographic change, a chunk of the book focuses on Vancouver. Prof. Condon relocated to Vancouver from the University of Minnesota for his UBC teaching position in 1992.
“Vancouver now presents an attractive but largely false image to the world, an image that suggests comfortable citizens housed in gleaming glass towers enjoying brilliant mountain views,” he writes. “Unfortunately, this image conceals the reality where many of those high-rise units sit empty – nothing but ‘cash boxes in the sky’ for investors – while wage earners crowd into small apartments, often devoting well over 50 per cent of their after-tax income to rent.”
He argues that in Vancouver, cost of land gets in the way of affordability, and when the city adds density to a neighbourhood and encourages land assemblies, it is only increasing the price per square foot. Instead, he suggests a missing middle solution on a typical sized lot where five or six units could be built, with a couple of non-market units required to mitigate any speculation. Splitting up, or hiving, a detached-house property is the alternative to building an unaffordable duplex or a tower, and it doesn’t involve the wasteful razing and redevelopment of the entire city. If widespread, it could contribute significant density.
Whatever the answer to the housing crisis, it’s especially crucial that we work it out now, as we’ve seen during the pandemic that lack of central housing has put front-line workers at serious disadvantage. Low wages and long commutes have put people at risk of contracting the disease, Prof. Condon says. Ironically, white-collar workers who can afford to live centrally can also afford to work at home, out of harm’s way.
“Inequality seems to be the vector for the disease and unavoidable exposure to other people who may be carriers for the disease for those front-line workers who have no choice but to confront many, many people throughout the working day,” Prof. Condon said in an interview. “It has become so obvious now that we should re-examine the overall strategy of how we distribute jobs and housing and transportation, so that our region is more socially equitable as well as resilient against future health threats – not just to workers but to everybody.”
Prof. Condon encourages urban planners to join in on a revival in non-market housing, which has become unfashionable in the past 50 years.
Mr. Donaldson also looks to senior government to get back to protecting its citizens with robust housing programs. As to why government didn’t intervene sooner, before we entered crisis mode, he can’t help but be cynical.
“We were just a bit naive to the effects of what would happen when such major players came around. People who are really, really rich are unscrupulous and used to getting around the regulation, and we didn’t think it was possible that it could get as crooked as it did, because we weren’t used to it at that level.
“There have been plenty of people who’ve raised the alarm about it over the years. … And it seemed silly that nobody really noticed for as long as they did, because it had been happening for so long, the exact same pattern writ large.
“The most charitable interpretation that I have is that they didn’t ask any questions because they didn’t want the faucet of money to get turned off."
The Globe and Mail
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