How could it be that so many houses appear to be empty, without neighbours waving hello, or mowing their lawns, or holding block parties, or giving out candy at Halloween? How could so many people be wrong?
The response to the city-commissioned study on empty housing was predictably immediate. Some media were quick to use the report's low numbers as proof that speculative buying with foreign money was a myth.
The study, which was intended to finally illuminate both city hall and residents on the extent of empty housing in Vancouver, was anti-climactic, to say the least. It reported that a mere one per cent of single-family homes were empty, a figure that hasn't budged much since 2002. The overall vacancy rate was at 4.8 per cent. Only condo vacancies raised an eyebrow, at around 10,000 units. So what happened?
The answer to that question is far more nuanced than the report's use of BC Hydro electricity data can provide. The author of the study, Bruce Townson, is frank about the study's limitations – and there are several.
Houses that had the electricity turned off – such as old houses that sit empty as they await permits for demolition and redevelopment – were not counted in the study. They were only counted after electrical service had been restored for a full year. In this market, there have been many cases of homes sitting empty, without electricity, awaiting redevelopment. Considering that there are 950 house demolition permits taken out on average each year, that's potentially a high number of houses that didn't make the cut. Many newly built houses were also exempt. They too were only considered empty once the electricity was turned on, and remained on, for one year.
Houses that only have visitors during summer months were counted as occupied. Houses that sit empty but have a caretaker come by and generate electricity use at least five times a month were also considered occupied. And a house with the lights on timers and a housekeeper or maintenance person who comes by and uses the electricity, were also counted as lived in.
"If you have timers on at the same time, day to day, but then Jerry comes in and introduces a load every Monday and Wednesday each week and introduces high electricity use for a couple of hours on those days, and leaves, then that would be occupied, based on the data we have," said Mr. Townson.
As well, the study did not include data from 2015, which was a record year for Vancouver real estate. From January, 2015 to January, 2016, the average house price soared 46 per cent, all the way up to $2.87-million. In Vancouver proper, the benchmark price for a detached house hit a record $1.94-million in January, or a 26-per-cent gain from a year earlier.
"This is not out of design; this is out of the limitation of data," says Mr. Townson.
Mr. Townson says the report needs context, and further research is required. It is by no means intended as a comprehensive study on the uses of housing, or an explanation for Vancouver's affordability problem.
"When you look at it through the lens of what the city of Vancouver is trying to do, they are trying to address affordability – low vacancy rates – and you have to look at long-term non-occupancy, not short-term stuff."
Councillor Kerry Jang says the chief concern was to find out if houses were empty for a year at a time. He says the report is proof that foreign buyers are not hiding their money in houses and leaving them to fall into disrepair. He has no issues with a homeowner who only uses a house for a week or two out of the year, or a couple of months.
"It goes back to the fact that they assume an Asian investor is parking his money in Vancouver, leaving their house empty. That's what I'm taking issue with here. It's your property. If you want to live in it half the year, that's your business. Are you to tell me I have to live in my house for eight months of the year? What happens if I don't? Are you going to take it away from me? That's the argument."
Point Grey MLA David Eby, who's raised the issue of empty houses in the media, says he was shocked at both the survey results, and also the media reaction, which tied the results to proof that foreign investment was a "myth." He calls the methodology "conservative."
"We have a shocking number of empty condos and a huge number of underused homes. The people who are trying to sell this [myth] line should spend a little time in Point Grey, in Kerrisdale, and they will see the reality for themselves, in the stores and on the streets. I understand the reasons for underselling this report and saying, 'Oh, look, the real estate alarmists have been disproven,' because a lot of people are benefiting from this system, but our community knows the issues. We see them every day."
Mr. Eby is holding a town hall meeting on March 16, on the subject of international speculation in the housing market, shadow flipping, and the disconnect between incomes and housing costs. Because of demand, he has had to change from a smaller venue to the 700-seat Hellenic Community Hall.
Academics who've done their own research on the topic of affordability and global wealth have also been surprised by both the study, and the media reaction to it. Professors David Ley and Tom Davidoff, both from University of B.C., had participated in the city's follow-up meeting Wednesday to discuss the findings.
"Some of the reactions in the media – for example, this shows foreign investment is a myth – are hopelessly misplaced," says Prof. Ley. "For a number of us, non-occupancy is a small part of the story, and should not be conflated with foreign investment or housing affordability. These are much bigger and separate issues."
Prof. Ley did wonder about the results, however.
"They are surprising, and counter some persistent community perceptions. Are there some hiccups in the methodology?"
The numbers are qualified at a rate "higher than one would expect in a report of this kind," he added. He cites a section of the report, where it recommends placing "less attention to absolute occupancy rates at any given time."
But that's exactly what the headlines did do."
Prof. Davidoff and a group of other real estate economists recommended earlier this year that the province impose a 1.5-per-cent tax surcharge on owners of vacant homes or those who don't pay enough income tax. The plan, which they called the BC Housing Affordability Fund, includes tax exemptions for rental income from non-family members, a move designed to get unoccupied units back into the rental market. He's had recent discussions with the province that look promising.
"I am quite optimistic that something will happen," he says.
He thought the study did a careful enough analysis with the data it had. However, he questioned whether it was fair to observe that there had been much of an overall trend when data for 2015 was missing. He also said the results have no connection with the fact that there's foreign money at play in the city's real estate market.
"If you look at [real estate] signs and marketing efforts on the west side, they are not intended for people from here."
Prof. Davidoff also differentiated between outright vacancy and other forms of foreign ownership housing, such as part-time use.
"My guess is that [the study] doesn't pick up the types of ownership and semi-use that might not conform with what people want for housing in Vancouver.
"The fact that you are occupied for several days in summer doesn't mean that someone is going in to the office every day."
Editor's note: The print version and an earlier online version of this story had several words missing from Mr. Townson's explanation of how data was collected for the study. This version has been corrected.