Bob Ransford
Sun
This is typically a slow season for real estate sales, with most consumers trying to catch up on credit card accounts from a month or two of shopping sprees. January real estate numbers could buck the normal trend, however, just as the whole real estate market has over the last year.
As a new year dawns, making sense of the one that just passed is still a real chore. It seems like the economic surge that we experienced this last year was almost wholly driven by a real estate-based frenzy that perhaps peaked over the last twelve months but remains the only visible engine of economic growth in these parts.
It was easier to make sense of earlier real estate booms in Vancouver when our resource-based economy used to go through cycles of expansion and contraction tied to commodity price fluctuations. It was even easier to make sense of the record-setting real estate boom of the mid-1990s when a new international market discovered Vancouver as Hong Kong’s sovereignty was about to be handed over from Britain to China.
Pinning down what exactly fuelled our latest trend-setting real estate boom is harder.
Job growth is certainly one fundamental driving the market. Many new jobs created by the institutional projects that are part of the pre-Olympic period provided the wealth that brought new homebuyers to the market.
The residential construction sector itself also was a significant job creator. Kind of like the chicken and the egg. It is somewhat scary that we have little more than this to point to as our engine of growth.
One reality accompanied the widespread preoccupation with residential real estate in Vancouver over the past year. We finally realized that our land supply is finite. We also realized that there is a connection between the amount of land available for development and that other word “affordability.”
The “D” word–density– is also no longer taboo because it is the other element in the magic affordability formula when you have a finite amount of land.
Believe it or not, these realities are now actually popular topics of conversation. In Vancouver, the word “density” is especially trendy if it is preceded with the three-letter largely undefined prefix “eco.”
During the next year, perhaps someone may connect all the dots and stumble on this simple formula that holds the magic solution for the affordability problem.
It seems like we are not the only ones in the world preoccupied with finding a magic solution to the housing affordability problem.
The following quote is from an editorial published in the New York Sun newspaper a couple weeks ago.
The editorial lamented how New York City politicians, while intoning about the need for affordable housing and proposing more rent and construction subsidies and other handouts, operate a system of onerous and costly regulations that drive developers away.
The editorial writers implored Michael Bloomberg to cut red tape as a means of making housing more affordable.
“If the mayor is serious about making New York an affordable place to live for people with middle-class incomes, the answer is neither more subsidies nor more regulation. The right way to go is to make it possible for developers to do their developing by slashing the regulations that discourage building, keep the housing supply down, and push prices up.”
New York has seen a building boom, like Vancouver has, where you would expect new housing would add to the supply and keep prices affordable. Critical market observers in New York point out however that onerous regulation has led to less development of ordinary housing and instead developers have focused on higher value projects where the overall numbers are bigger.
These and other realities of urban development and the real estate market will continue to be topics for discussion in our city over the next year and probably well into the future.
I wasn’t surprised the other day to learn of the opening of a new business in Vancouver that symbolizes how preoccupied Vancouverites have become with owning a home and participating in the real estate market. A unique new coffee shop is soon to open on Commercial Drive between Second and Third Avenue.
The proprietor is a neighbourhood realtor who plans on displaying real estate listings on the wall and allowing patrons to access the MLS listings on a computer while enjoying an espresso. She and a residential mortgage broker will use the shop as their home base, making their services available to patrons who stop in to enjoy a coffee and talk about buying and selling properties.
Bob Ransford is a public affairs consultant with COUNTERPOINT Communications Inc. He is a former real estate developer who specializes in urban land use issues.
E-mail:[email protected]
© The Vancouver Sun 2007