And then there are those who believe that a lot of the new housing that’s brought online targets investors who seek to maximize profit, turning housing into a game of real-life monopoly.
In the past few years, big money investors, also known as institutional investors, have moved into the Lower Mainland to take direct advantage of one of the world’s most lucrative real estate markets.
“They are aligning with local developer talent that are good at sourcing opportunities and properties – the pension funds are happy to participate directly with guys like us,” said Brent Sawchyn, principal and chief executive officer of development company PC Urban Properties, and a Forum panelist.
He estimates that, globally, there are about a dozen markets for pension fund types to inject their money and Vancouver is a draw.
Some housing advocates have accused the institutional investor of pushing prices higher because they snap up old apartment stock and seek healthy returns.
“Some argue, ‘this is a new building, rents are expensive, it’s not affordable.’ But if we’ve got 75,000 to 100,000 people moving here a year to the Lower Mainland, we need to build housing.
Some argue that anything that gets in the way, such as government regulation that restricts rents, or building heights, or costly development fees, or public engagement that stalls projects for years, for example, impedes the delivery of supply.
Simon Fraser University professor of finance, Andrey Pavlov, argues that institutional investors are generally better landlords than mom-and-pop landlords, and regulations and taxes designed to cool the market only add to their financial burden, making housing less affordable.
In my view, we should provide enough housing even for that, and it can be done, but there is a more difficult argument to be made there.
urban design professor and author of Sick City: Disease, Race, Inequality and Urban Land, argues that the housing crisis stems from the commodification of land, which is no longer based on its value for housing, but for its value as a global asset class.
“We have moved from an economy based largely on wages to one based largely on investments, with investors now in the driver’s seat.
“By and large, it’s more the commodification of housing that is fundamentally a problem, that we just haven’t identified as being a real thing.
“When the dot.com collapsed in 2000, that sort of released a lot of capital and that money began to flow into commercial real estate.
So there has always been money to be made, and the province is constantly trying to manipulate the system to drive or incentivize capital to behave in a certain way – and we are just too late.
He said he just priced a 128-unit, 20-storey concrete tower at $650 buildable per foot, not including land, profit and interest to cover the financing.
“We had a deal we were quite interested in, and there was an investor group that was interested in the project, and putting capital in, and what they wanted us to do was something that I just would not do.