The Decline of Vancouver.

It is a political document to cut red tape as much as it is a plan. It snips out input from neighbours and residents on individual applications. The Plan contains all kinds of suggestions of what the future should look like, and what kind of housing and density will be considered, but offers little guidance on how this is to be achieved or what kind of staging is anticipated.

This isn't too surprising.  They are following the municipal pipe dream of having a perfect specification for growing the city long-term without all the pesky expenses of building the communities that the people already living there want.  It seems like this is the goal of every city and town.

Posted by: Kenny

The plan is Vancouver centric and creates capacity for a population increase from 675,000 to 920,000 in thirty years.

Isn't that like, basically nothing? 1% population growth per year. 

I would think we're densifying at a higher rate than that already?

True that it's not significant growth on a yearly level, but consistent growth is a problem. Where will those extra 1/4 mil people all live in Vancouver proper? How much do we want to densify everything? Now extrapolate that growth out to all the surrounding cities. If you think the trails and rec amenities are crowded now what will they be like in the future. Humans have a serious problem with growth and we can't seem to recognize it.

Posted by: syncro

Posted by: Kenny

The plan is Vancouver centric and creates capacity for a population increase from 675,000 to 920,000 in thirty years.

Isn't that like, basically nothing? 1% population growth per year. 

I would think we're densifying at a higher rate than that already?

True that it's not significant growth on a yearly level, but consistent growth is a problem. Where will those extra 1/4 mil people all live in Vancouver proper? How much do we want to densify everything? Now extrapolate that growth out to all the surrounding cities. If you think the trails and rec amenities are crowded now what will they be like in the future. Humans have a serious problem with growth and we can't seem to recognize it.

I am not sure what can be done about population growth.  Climate change is going to put a lot more pressure on immigration into this country and considering how much Canadians have contributed to climate change and how much land we have I think we have an obligation to accept growth.  What I can't understand is why we can't spread that growth around more.  It seems like that is changing as people work remotely, but we need to build more infrastructure so new immigrants don't all end up in the Lower Mainland.  Our coast is basically uninhabited and we have practically no transportation system that connects the rest of the province to Vancouver.  All we do is build more ways to get around the Lower Mainland.  We need some Norwegians to show us how to connect a fjord-riddled coastline.

As property values go down and interest rates go up the cost of rent is skyrocketing. 

There should be a law enforcing some kind of ratio between rent and assessed property value. 

Unless the actual expectation is for rents to cover any and all expenses the landlord might incur in which case landlords truly are parasites whose heads should be separated from their bodies by way of some kind of heavy falling blade.

Posted by: Fast-Orange

As property values go down and interest rates go up the cost of rent is skyrocketing.

There should be a law enforcing some kind of ratio between rent and assessed property value.

Unless the actual expectation is for rents to cover any and all expenses the landlord might incur in which case landlords truly are parasites whose heads should be separated from their bodies by way of some kind of heavy falling blade.

Rent prices are simply supply and demand based. Ties back into that constant growth problem that Synchro brought up.

Not to say that rent prices isn't a real problem.  Just not sure that tying rent price to asset valuation is part of the solution or not.  Just read an article that the average rent for a 2bdrm in Vancouver is now 40K/year?  Welcome to Monaco North.

https://dailyhive.com/vancouver/rentals-report-july-2022-vancouver  (and yeah - shit source - I followed it off of reddit)

Posted by: Couch_Surfer

Posted by: Fast-Orange

As property values go down and interest rates go up the cost of rent is skyrocketing.

There should be a law enforcing some kind of ratio between rent and assessed property value.

Unless the actual expectation is for rents to cover any and all expenses the landlord might incur in which case landlords truly are parasites whose heads should be separated from their bodies by way of some kind of heavy falling blade.

Rent prices are simply supply and demand based. Ties back into that constant growth problem that Synchro brought up.

Not to say that rent prices isn't a real problem.  Just not sure that tying rent price to asset valuation is part of the solution or not.  Just read an article that the average rent for a 2bdrm in Vancouver is now 40K/year?  Welcome to Monaco North.

https://dailyhive.com/vancouver/rentals-report-july-2022-vancouver  (and yeah - shit source - I followed it off of reddit)

It will hit a point fast where these overleveraged career landlords with multiple properties purchased with minimum down payments won't be able to find anyone willing or able to spend what they need to cover their mortgage payments. They won't be able to sell either as their properties are worth less than what they owe on them. The next few years are going to be fun.

Posted by: Fast-Orange

Posted by: Couch_Surfer

Posted by: Fast-Orange

As property values go down and interest rates go up the cost of rent is skyrocketing.

There should be a law enforcing some kind of ratio between rent and assessed property value.

Unless the actual expectation is for rents to cover any and all expenses the landlord might incur in which case landlords truly are parasites whose heads should be separated from their bodies by way of some kind of heavy falling blade.

Rent prices are simply supply and demand based. Ties back into that constant growth problem that Synchro brought up.

Not to say that rent prices isn't a real problem.  Just not sure that tying rent price to asset valuation is part of the solution or not.  Just read an article that the average rent for a 2bdrm in Vancouver is now 40K/year?  Welcome to Monaco North.

https://dailyhive.com/vancouver/rentals-report-july-2022-vancouver  (and yeah - shit source - I followed it off of reddit)

It will hit a point fast where these overleveraged career landlords with multiple properties purchased with minimum down payments won't be able to find anyone willing or able to spend what they need to cover their mortgage payments. They won't be able to sell either as their properties are worth less than what they owe on them. The next few years are going to be fun.

Then the REITs will swoop in and buy up all of the distressed properties, like what happened in Detroit from 2009-2011.

A former colleague of mine worked at a REIT based in Toronto at the time that shifted its entire focus to Detroit, they made crazy returns from 2012-2016 both on rents and resale of properties they'd picked up cheap during the last recession, performed cosmetic renovations on, and resold. They were was buying single family homes for $20k that had previously been assessed in 2007 in the $400k-500k range.

Posted by: Fast-Orange

It will hit a point fast where these overleveraged career landlords with multiple properties purchased with minimum down payments won't be able to find anyone willing or able to spend what they need to cover their mortgage payments. They won't be able to sell either as their properties are worth less than what they owe on them. The next few years are going to be fun.

Maybe. But what is fast and what is that tipping point?

Prime rate after yesterday's 1% point bump is now 2.5%. That's just bringing us back to 2009 interest rate levels which are still pretty low on a historical basis.

The question is really, how many more increases are we facing and what does this thing top out at. For sure this will hurt people that are over-leveraged, but it will also curb out inflation (eventually) by sucking all that money out of the system.

I see the following:

Immediate term: Variable rate people get hit.  They may or may not notice as they may be locked in on payment price, meaning the only impact is less money getting allocated to principle.

Near term: People re-financing get hit.  Depending on how much equity they have, this could sting a lot (if they try to keep their amortization schedule) or they could re-fi and push that amortization out to smooth the payments.

Medium term: If this cools housing pricing and the Loan-to-Value ratio gets bad for some people (>80%), then at re-fi time, some people could be in for a really bad shock when they have to either come up with the difference or get taken out.

But it all depends on where that rate settles in at...

Posted by: Couch_Surfer

I see the following:

Immediate term: Variable rate people get hit.  They may or may not notice as they may be locked in on payment price, meaning the only impact is less money getting allocated to principle.

Near term: People re-financing get hit.  Depending on how much equity they have, this could sting a lot (if they try to keep their amortization schedule) or they could re-fi and push that amortization out to smooth the payments.

Medium term: If this cools housing pricing and the Loan-to-Value ratio gets bad for some people (>80%), then at re-fi time, some people could be in for a really bad shock when they have to either come up with the difference or get taken out.

But it all depends on where that rate settles in at...

For 2022 the forecast (sorry don't recall the exact source) is for rates to rise up to 3.25-3.5% from the current 2.5%.

Posted by: Fast-Orange

Posted by: Couch_Surfer

Posted by: Fast-Orange

As property values go down and interest rates go up the cost of rent is skyrocketing.

There should be a law enforcing some kind of ratio between rent and assessed property value.

Unless the actual expectation is for rents to cover any and all expenses the landlord might incur in which case landlords truly are parasites whose heads should be separated from their bodies by way of some kind of heavy falling blade.

Rent prices are simply supply and demand based. Ties back into that constant growth problem that Synchro brought up.

Not to say that rent prices isn't a real problem.  Just not sure that tying rent price to asset valuation is part of the solution or not.  Just read an article that the average rent for a 2bdrm in Vancouver is now 40K/year?  Welcome to Monaco North.

https://dailyhive.com/vancouver/rentals-report-july-2022-vancouver  (and yeah - shit source - I followed it off of reddit)

It will hit a point fast where these overleveraged career landlords with multiple properties purchased with minimum down payments won't be able to find anyone willing or able to spend what they need to cover their mortgage payments. They won't be able to sell either as their properties are worth less than what they owe on them. The next few years are going to be fun.

What percentage of the rental market do you think these overleveraged career landlords units represent?

Roughly 45% of all rentals in Van proper are purpose built rentals (PBR). Of the remaining 55%, less than half of those are secondary suites which leaves about 35% of the rental stock as investments properties - houses or condos. Based purely on personal observation and knowing that many secondary suites are not registered, I'd guess that the number of stand alone rental investment properties is less than 35% of the total rental pool. The number of investment rental properties that have been around for a while vs those purchased in say the last 5yrs is probably much higher. So the number of properties that might be in the situation you describe is probably quite low and would not be enough to significantly affect the rental or sales market at all. This is based on the following report, which is from 2017.  Plus you also have to consider the REIT/Investor factor as rnyael mentioned. 

https://vancouver.ca/files/cov/housing-characteristics-fact-sheet.pdf

I don't think this necessarily undermines the point you're trying to make towards the difficulty renters here face, but supports it. There is huge pressure to even find rental accommodation, never mind rentals that are affordable based on avg incomes across the region. Another thing that I think should be noted as putting significant pressure on the rental market is that close to 40% of all rental households are single person households. The ability of local govts to affect the housing situation is limited when you factor in things like investment capital, population growth and geography. Local govts also have to contend with the wishes of their current residents whishes on things like building low and mid rise developments in areas that have traditionally been SFH, which represents most of the land in the metro Van area. 

It's a lot of info to take in and a shit ton of variables/metrics to consider, but it's necessary in terms of finding solutions that will improve the life of the average metro Van citizen.

I assumed it had to be pretty high as I had just read an article stating rising interest rates would lead to a sharp increase in rent as rent prices adjusted to reflect the interest rates. 

I don't think these huge REITs are immune to this either as they don't buy all their properties outright. Many of them are up to the tits in debt too but get loans easily due to owning so many assets. 

Either way I put the REITs in the same category as career landlords. Leeches and parasites that contribute nothing and ruin everything. Off with their heads the lot of them.

Posted by: Fast-Orange

I assumed it had to be pretty high as I had just read an article stating rising interest rates would lead to a sharp increase in rent as rent prices adjusted to reflect the interest rates.

I don't think these huge REITs are immune to this either as they don't buy all their properties outright. Many of them are up to the tits in debt too but get loans easily due to owning so many assets.

Either way I put the REITs in the same category as career landlords. Leeches and parasites that contribute nothing and ruin everything. Off with their heads the lot of them.

So if those people aren't buying homes to rent out then where are those renters supposed to live? I don't think it's unreasonable to expect a landlord to want to not only cover their expenses but make a few dollars as well. Of course that doesn't excuse landlords from being shitty humans who take advantage of people and don't follow through with basic maintenance and care to ensure safe living conditions. For those that are slumlords, yes off with their heads so to speak.

Posted by: syncro

Posted by: Fast-Orange

I assumed it had to be pretty high as I had just read an article stating rising interest rates would lead to a sharp increase in rent as rent prices adjusted to reflect the interest rates.

I don't think these huge REITs are immune to this either as they don't buy all their properties outright. Many of them are up to the tits in debt too but get loans easily due to owning so many assets.

Either way I put the REITs in the same category as career landlords. Leeches and parasites that contribute nothing and ruin everything. Off with their heads the lot of them.

So if those people aren't buying homes to rent out then where are those renters supposed to live? I don't think it's unreasonable to expect a landlord to want to not only cover their expenses but make a few dollars as well. Of course that doesn't excuse landlords from being shitty humans who take advantage of people and don't follow through with basic maintenance and care to ensure safe living conditions. For those that are slumlords, yes off with their heads so to speak.

Well speaking for myself if so many people hadn't been buying multiple properties to rent out I would be owning by now and I can't imagine I'm a rare case. We could buy something now but that's not gonna happen what with so many properties out there with outdated assessments

The whole root of the problem is houses are being used as investment vehicles and they should never be used this way by anyone.

This whole landlords provide housing line is total nonsense as career landlords make renters out of would be owners.