Tuesday, February 26, 2008

rising tides

(click to enlarge)

I read this article over at the TYEE - Homeless Hell Hole - and it got me thinking more about the Olympic schmozzle.
Judy Graves has spent the past dozen years touring Vancouver's dark parks, garbage-strewn alleys, and mouldy abandoned buildings. Graves, who co-ordinates the city's pioneering street outreach program, said the roughest place...is located directly beneath the glistening dome at Telus World of Science.

"This is the worst," Graves said...on a tour of the murky labyrinth at the eastern edge of False Creek. "This is the place that scares me the most."

It's a place that one must be either mentally ill or drug addicted to endure. Yet..there is no shortage of such visitors.

And it's a place literally soaked in irony: even as the Olympic Village for the 2010 Winter Games rises next door, the piers beneath what was the signature structure of Expo 86 have become a last refuge for Vancouver's most desperate residents.

...Some Vancouver parents may find it upsetting that such misery endures within sight of any observant child gazing out the Science World windows or playing in the adjoining park. But experts who study the long-term effects of mega events such as Expo 86 and the 2010 Olympics would not find it surprising.

The Olympic games alone have displaced more than two million people during the past 20 years, according to a 2007 report by the Geneva-based Centre of Housing Rights and Evictions. Very few of those evictions were caused directly by Olympic organizers making way for venue construction. The vast majority were instead the result of speculative development in advance of the Games themselves. (emboldening mine)

In Sydney, for example, rents rose by 40 per cent during a five-year period leading up to the 2000 Summer Games.
Here, rents have gone up, but thankfully, we have rent controls. RE prices are another matter.

These lines inspired this post;
As recently as last June, the Vancouver Police Department's marine unit was called to rescue a homeless man who became stranded at high tide.

"A fella' who was living in the area went under there at low tide, then the tide came in and trapped him,"
I can relate to that guy (though thankfully, I am not homeless), in that I feel like I have become trapped in a decrepit rental by the rising tide of RE values.

It is said that a rising tide will float all ships, but I would argue that it will also drown a lot of rats. A lot of those ships of fools will also be smashed on the rocks of ignorance when the tide floods out.

Nice work Poole, Rennie, Campbell, et al. It really must be the Best Place on Earth - people will even sleep under piers, with rats, to live here.

26 comments:

patriotz said...

Here, rents have gone up, but thankfully, we have rent controls.

Rents are not being held down by rent controls, except perhaps for some long-term tenants. Landlords are free to charge what they want to new tenants.

If they were, there would be no vacancies at all (like in the late 1970's), rather than the stock of empty apartments for rent at wishing prices that we have now.

No surprise, since housing stock has been growing faster than population for years now.

Ironically, housing bubbles benefit renters long term by getting investors to put money into housing at terrible yields. Just like the dot-com bubble and companies like 360 Networks gave us the low long distance rates we enjoy today.

solipsist said...

Good point patriotz.

Scullboy said...

I'm really glad I am not the only one who feels like he's trapped in a crappy rental.

As far as I can tell this is a krrish/Dosh free zone so I feel ok in admitting that.

I also feel ok in saying here that oh yeah, I'm waiting for mathematics to trump psychology. When the bubble pops (and it will) and hundreds of people are bankrupt (and they will), I am really going to soak in the schadenfreude (sp?).

These are the people who were so damn smug about "the market" on the way up... how they were so clever getting in at the right time and all that.

You just know on the way down the story will be about innocent people losing their homes and how "unfair" it is.

I guess I'm an asshole for feeling that way, but I still do.

aetakeo said...

I also feel somewhat trapped. We had a really rough fall as our landlords planned to raise our rents by 35% -- on the amusing idea that, because the mortgage and upkeep on our suite was greater than the rental income, we were therefore "subsidy" tenants, and should give them all our income and investment info, so that they could base our rents on 30% of our income. And when we refused, raise our rents to *cover their carrying cost*.

Um, no.

We're in the West End, and the rents in the fall were all in the "you WISH" zone. $2100 for a two bedroom? Not going to happen. We've been in our suite for 5 years. We've got kids, and one's in school and the other's in care, and we didn't want to move.

Fortunately, our landlords finally grabbed a clue.

Tony Danza said...

on the amusing idea that, because the mortgage and upkeep on our suite was greater than the rental income, we were therefore "subsidy" tenants, and should give them all our income and investment info, so that they could base our rents on 30% of our income. And when we refused, raise our rents to *cover their carrying cost*.


Give them all your financial info to readjust your rent? Whiskey Tango Foxtrot? Where do these people come from.

solipsist said...

I am really going to soak in the schadenfreude

Canadians are funny that way - we delight in the down-fall of our exalted ones. Convict...um...er...Conrad Black being a case in point.

landlords planned to raise our rents by 35%

Ours did the same last year (about 13% though), and I told him why we would not pay more, sent him a link to the RTA, and told him I had a half-a-mind to demand a rent reduction. We had 0% increase, and 0% this year.

Where do these people come from.

And, Whiskey Tango Foxtrot do they think they are?

Anonymous said...

Crikey Sol, nice photoshop.

Did a double-take on that :)

Mathematical said...

I feel trapped too scullboy and see your point. I'm stuck paying high rent but yet don't want to buy because I know everything is overvalued and will come down shortly. The writing is on the wall. The problem is people have been divided into owners and renters.

We all have friends who have bought and they keep hoping the market goes up while I keep hoping it will go down. I have a friend who bought a place in North Van a year and a half ago. His place went up $50,000. I said its paper money. It can just as easily go down in a year an a half. He got pissed off and said that’s impossible.

I show him graphs (rent\owner ratio), affordability issues, history like every city that hosted the Olympics has a boom then a bust. I pointed to the US at how their housing is crashing. Doesn't believe me, won’t listen to me, his uncle is a real estate agent and has hypnotized him.

He said “How can you hope my place goes down in price.” I said “how can you expect me to come up with another $50,000 to buy a place?” Get a second job or get a job that pays over $100,000 neither will happen. I will wait for a market correction thank you.

There will be winners and losers. Who will win and who will lose, only time can tell?

Anonymous said...

Domus comments at Robs site are worth reading.
Following Sophia, H&H and Garden City are also in receivership.
Smaller and less reputable developers do not have deep pockets to sit out a pending recession.
If the market is about to crash, they will all scramble to a safe exit hopefully before the flippers and the presale buyers.

Anonymous said...

I really enjoy your blog - have been looking at it frequently over the past few months.

Not sure why but this posting blew my mind: http://vancouver.craigslist.ca/rfs/590668931.html.

This is duplex!?? Sometimes I feel like I'm in a bad Woody Allen movie...

patriotz said...

He said “How can you hope my place goes down in price.”

Says it all. The entitlement mentality. My house is going to make me rich.

I don't care if the value of my computer or my car goes down (of course they do go down). I bought them to use, not to sell to somebody else.

If your friend just bought his house to live in, he wouldn't care if the market price went down. He's still got the same house and he's still making the same payments. He's still getting exactly what he paid for.

Unfortunately for your friend, his entitlement ends when the fools run out.

And people still think it's different here from the US.

Anonymous said...

Thanks for this thread, solipsist.

scullboy and aetakeo, I have taken the liberty of posting your renter anecdotes over at Vancouver Real Estate Anecdote Archive HERE.(let me know if you object!)

By the way, scullboy, you're spot on with your spelling of 'schadenfreude'.

thanks
vreaa

vreaa said...

mathematical:
Thanks for your account. I've also lifted it as a great RE-exchange anecdote, here , hope that's okay with you.

fastso said...

Well Folks, the show begins!

Globe and Mail:
Housing resales drop 6.3% in January

fastso said...

You know the decline is a real deal, when RE Agents start bring up the weather defense.

"in part due to snow storms which “made it extremely difficult just to get down residential streets to show a listing,” said Ann Bosley, president of CREA, in a statement"

sansan said...

Rents in the building I live in have been going up (i.e. doubling!) for all fixed-term tenants, so for this reason most peeps have been moving out. Now the building has a 50% vacancy rate... By my calculations, the owners of the building have lost at least $10,000 in "realistic" rents and $20,000 in "fantasy" rents. They're also spending a pretty penny on renovations... I mean, paint and stainless steel appliances!

Husband and I have been looking for another place to rent for a few months, but haven't found anything suitable. There are too many landlords out there dreaming with the rents they're asking for.

Since we're not ready to bleed ourselves to live in Vancouver, we've gotten creative and have decided to renovate my parent's house so we can have a suite there. This isn't without risk either: It's a little risky to tie up our money this way, esp. since we expect housing prices to come down eventually. The reno costs are significant, but we figure that after living there for three years or so, we'll have broken even on what we'd have spent on rent. And of course the satisfaction of knowing no more of our hard-earned dollars will flow into the pockets of Vancouver's "land barons" is priceless.

patriotz said...

You know the decline is a real deal, when RE Agents start bring up the weather defense.

The weather defense also works the other way. "Nobody is buying houses because they're all out enjoying the nice weather".

Of course at any given time one part of the country is going to have good weather, and another part bad weather. So in the US you were hearing the opposite defenses at the same time a year or so ago.

The song remains the same.

Anonymous said...

but thankfully, we have rent controls.

Great blog, but I have to disagree with you on the benefits of rent controls. Government controls of any kind are actually the primary reason for high RE prices. In a free market, whenever demand outstrips supply, there is an incentive to build more units and achieve equilibrium. Price controls, zoning restrictions, and other well-intentioned regulations have the opposite effect, reducing the potential for profiting and hence the number of additional housing units actually built. So rent controls end up having the perverse effect of reducing equality among renters - new tenants end essentially subsidizing existing ones, and the overall quantity of housing goes down for all, increasing average prices.

patriotz said...

So rent controls end up having the perverse effect of reducing equality among renters - new tenants end essentially subsidizing existing ones

There is a case to be made for this argument in a place like New York, which has a very large number of people living long-term in rent controlled units.

Vancouver doesn't. And the very fact that specuvestors are lining up to buy condos than can only fetch a price/rent of 300 shows that what rent controls we have are completely irrelevant to limiting supply of new rental housing.

solipsist said...

what rent controls we have are completely irrelevant to limiting supply of new rental housing.

Thanks for keeping your eye on the ball patriotz.

Scullboy said...

I have to confess, after tonight I feel a whole lot different.

More then ever, I'm confused.

I was just out at a caesar party of some friends. They live in a place that frankly is marginally nice then my place in the West End. Not to sound like a dick but it wasn't nearly as nice as my old place in TO.

It was *REALLY plain. the colours were stark and kind of depressing. From what I can tell the devolper put not thought at all into how to light the place. Their furniture wasn't as good as mine.

They're nice guys but I was talking to one and he was plainly as confused as I was about how things had played out. He told me they'd moved about every six months from one condo to another. Their agent would call them every couple of months and say "Do you know how much I can get for your place?"

Sure enough, each time they flipped they made a substantial amount of money. My friend mentioned several times it was American buyers who were lured into bidding wars by the difference in the dollar.

I look at all of this and I have to come to the following conclusions:

1) The homes here aren't nearly as nice as the ones in TO, and that's not saying much since those sucked.

2) People here have been bamboozled by really greedy real estate agents.

3) American buyers may have had a fairly distorting influence on the local market.

4) All the bull arguments are bullshit (oh, the smelly irony). The market here has been driven by greed, fear and gullibility, and nothing else


Right now I'm looking at my friends, who are very nice people, and I'm seeing people who have been manipulated by greedy people.

If those guys are typical, and I think they are, the the whole city really has been fooled. It really has been all smoke and mirrors. I don't thinK I've ever seen it as clearly as I do now.

Guys and ladies, the end really is in sight. It really was all illusion. It really couldn't hold up forever, and it really will be over soon.

Thank God.

patriotz said...

Sure enough, each time they flipped they made a substantial amount of money

No they didn't. They lost a substantial amount of money. Namely, the agent's commission and other transaction fees. That's how much they lost compared to the alternative - just staying put.

How obvious can you get?

Are people really that stupid? God help us.

American buyers may have had a fairly distorting influence on the local market.

In fact US buyers are a very very small percentage of the Vancouver market. They are significant in Whistler, and to some extent Victoria, both of which they are currently bailing from.

solipsist said...

scullboy - I am surprised to discern that you had an element of doubt in your convictions.

Vancouver has sadly become a fool's paradise. Smoke and mirrors, and smoke blown up yer arse.

I'll never forget voting against the Olympics, and the $150 million-odd in proposed City debt (hah!), all the while knowing that the bedazzled majority was voting for, in the belief that they would get free licence plates proclaiming us to be the best place in the flipping Lower Mainland.

It's all over, but the tears.


The generalized "Peter Principle"

in evolution systems tend to develop up to the limit of their adaptive competence link

solipsist said...

Are people really that stupid? God help us.

patriotz - I refer you to the generalized "Peter Principle"

Scullboy said...

Hey guys,

Patriotz, you're right of course. My excuse is in the first line of my post: "I was at a cesar party" :). The guys weren't awful, not were they your typical home ownig jerks.

I was kind of blown away speaking to them because it was a real opportunity to get a glimpse into the mentality.

It was also interesting to run the conversation through my bear filter to figure out what the hell's been going on....

One of the things that stuck in my hed was that the agents called these guys every six months to say "I can get you XXXX for the house".

I think a big problem with this city are the RE agents. I met some scummy jerks in Toronto, but BC's dirtbags are a whole other thing.

The guys I visited confirmed that there were agents who wouldn't take their business because their homes weren't worth enough. I had the same thing happen myself. That kind of thing just stuns me. I also know a guy who is a part time waiter, part time agent. I have never heard of such a thing... and he makes a fortune!

As you said, the gains are on paper and the people who made all the money are the banks, the agents and the CMHC.

I really really REALLY welcome to coming apoclypse (sp). I think we haven't really accounted for all the dirtbag agents in this city. I want them and their families to go hungry. I want their marriages to fail under stress.

I REALLY want them to suffer, because they are turning this city into something ugly.

Grumpus said...

Good news in the midst of the madness! Get ready for a welcome whiff of sanity in the Vancouver market madness!
Whistler property owners anticipate renting out their digs for upwards of a humble 100,000 smackaroos during the 2 week Olympic schmozzle. (Source: the cover of the Province as glimpsed through a vending box).

Common sense prevails. A reasonable balance has been restored!