real-estate

This past week newspapers reported on Vancouver’s high number of empty condos. The reports were based on new research by Andy Yan of BTAworks. Yan is known for an earlier 2009 study that used BC Hydro statistics to track the number of empty condos in downtown Vancouver. Yan’s new research essentially confirms the 2009 study: as of 2012 Vancouver has an average of 7.7% empty condo units, with an exception for downtown’s Coal Harbour, at 23% empty.

Many of the empty units in the ultra-luxury towers of Coal Harbour are seasonal homes and secondary suites for Canada’s high net worth elite. Canada’s tax cuts have unleashed billions of dollars into luxury real-estate near to home. After ten years of neoliberal reforms since the election of the BC Liberals in 2001, an unprecedented amount of wealth has been freed up for circulation and reinvestment in British Columbia. Profit rates have soared while the corporate income tax rate in BC has been reduced from 16.5 to the current 10%. Today the upper 20% of BC pay a lower total provincial tax rate than the remaining 80%, and the provincial government now collects more revenues from a regressive sales taxes than from income tax.

Since the election of Gregor Robertson and Vision Vancouver, the city has boasted the lowest corporate tax rate in the world, combined with millions in targeted tax breaks, subsidies, and fee exemptions for local billionaires. In each of the next four years, corporate profits in BC are projected to continue climbing and reach $31.3 billion in the year 2015 alone. Over the course of three decades, billions of dollars of surplus capital have produced flat wages, growing inequality and bloated financial markets. Is there a lot of freed-up capital moving into Vancouver’s speculative real-estate economy? Certainly.

For those who are raking in on Vancouver’s boom, it is easier to frame the housing crisis with “foreigners,” and there is no surprise that journalists have insisted on misrepresenting Yan’s research. Some editors have decided to step miles beyond Yan’s actual findings. A Vancouver Observer heading reads, “Foreign investment in real estate market resulting in empty condos,” and despite the Coal Harbour exception, journalists have used the 23% statistic as shorthand for the city at large. One inaccurate headline states blatantly: “Nearly a quarter of Vancouver’s condos are empty.”[1]

So it might come as a surprise to learn that no part of Yan’s research establishes or even implies a link between empty condos and foreign investment. One of Yan’s most significant findings is that a majority of property assessments for Vancouver condos are sent to investors living in the Lower Mainland. Almost all landlords and property investors are local residents, a majority of them holding primary residence in West-side neighborhoods like Point Grey and Shaughnessy. Yan found that a full 96% of the assessments were sent within Canada and the rest to the United States; only 0.8% were sent to addresses in China and Hong Kong combined. The upshot of this research, according to Yan, is the need to “take out the foreign and talk about the impacts of investment.”

Some claim that the property assessments are being sent to corporations based in Vancouver and forwarded overseas, but yet the number of assessments sent to management firms (2%) and the “firm/strata” category (6%) is a small minority — the rest were sent to individuals in the Lower Mainland. Yan’s basic finding is consistent with Bob Rennie’s industry research sent out yearly to his clients. The key to Vancouver’s market, Rennie states, is a historic shift away from the West half of the city towards new centers of speculation. West-side homeowners currently sit on $88 billion of leveragable clear-title housing stock, and homeowners are unsurprisingly using their properties to leverage the banks and move their children east.[2] This thesis was confirmed in an important PIVOT report on the gentrification of Mount Pleasant, which found that the (predominantly Asian) community surrounding Main and Broadway is in the process of being displaced by white yuppies (young urban professionals) from west of Granville. Simply put, property owners — or rather their offspring — are moving east on the backs of overleveraged mortgages.[3]

While Yan’s research gives no evidence for a link between foreign investment and empty condos, it does reveal the extent to which Vancouver condos are investor-owned rather than owner-occupied. According to BC Assessment statistics, 52% of condos are investor owned. For smaller units the proportion of investor owned (rather than owner occupied) is even higher, at 62%. In his presentation at SFU, Yan stressed the extent to which this finding brings into question assumptions of a one-to-one link between smallness and affordability. But again, nothing in the research points to a connection between foreign investment and empty condos. Yan’s findings were released at an SFU forum on “Foreign Investment in Vancouver’s Real Estate Market,” and in order to hear an argument in favor of the popular “foreigner thesis,” one would have to skip Yan and listen to the other speakers on the panel, like Sandy Garossino and Jim Sutherland.

It first has to be acknowledged that comments by Garossino and Sutherland exist in a larger context, not a vacuum. If we listen to the people worst affected by racism, the situation is worsening and today there is a palpable feeling of rising anti-Chinese racism in Canada, recently voiced by members of the Chinese community. According to Bill Chu, “the dislike of Chinese people has only lain dormant and is apparently being roused by recent events.” Earlier this month a mob of 1,000 residents asserted their “Canadian identity” by calling on Richmond politicians to reduce the number of Chinese-language signs in the city. This month immigrants are being rounded up in raids by the Canadian Border Service, producing a culture of fear for people deemed “illegal” by Canada’s — and Vancouver’s — expanding police apparatus.

Many people felt that the SFU event on foreign investment was “long-overdue.” According to this perspective, Vancouver’s politicians and researchers have been dragging their feet in their “duty” to put a numerical value on the amount of foreign investment injected yearly into Vancouver’s housing market. This has long been the position of Sandy Garossino, whose main approach is to claim “agnosticism” about the impacts of foreign investment while continually expressing “concern about foreign Chinese buyers in Vancouver.” This convenient two-way position allows Garossino to ride the wave of populist sentiment while inserting a minimal distance between herself and the worst representatives of populism and foreigner scapegoating.

Sutherland, who can be positioned somewhere between Garossino and Mark Hasiuk, used his speech at the SFU event to perpetuate the lie that in Vancouver “we don’t get refugees and poor immigrants, we only get a high end of immigrant.” Not only is Vancouver a place for refugees — when they arrive they are forced to pay more than half of their income to live in overcrowded housing. From listening to Sutherland one would not know, furthermore, that Vancouverites living in poverty are mostly people of colour, more than half of whom speak Chinese as a first language (54%). Like Garossino, Sutherland began his talk declaring his agnosticism about the effects of immigration on the local economy before moving headlong into monologue about the one-to-one link between immigration and unaffordability. At times Sutherland took on somber tones and his talk bordered on racist conspiracy, declaring at one point that “the media has been very complicit in all of this.”

So why is the “foreigner thesis” so popular among Vancouver’s political elite? One answer is that it allows the government to get away with its anti-affordable housing policies. Property-owning elites such as Mayor Robertson continually go on record to “lament wealthy immigrants making ‘green’ city unaffordable.” Why? Because it allows Vision Vancouver to serve the rich, displace the poor and deregulate the housing market without any consequences. In the face of an unprecedented housing crisis, Vision has passed ten policies to make the situation worse and zero to improve it. But when criticized for the crisis, the same political elites lean on scapegoating, citing “global forces” that are simply beyond their control.

Downtown’s empty condos are sitting only blocks away from the homeless shelters scheduled to close next month. The decision to shut down hundreds of shelter beds comes as yet another callous move in the celebrated “tight bond” between Vision Vancouver and the BC Liberals.[4] Still, few have taken notice as the housing crisis worsens. Affordable neighborhoods like Mount Pleasant and Chinatown are not being renovicted by the abstract forces of global capital, but by a municipal-developer alliance that tailors city policy to the needs of profit-making — doing so with pin-point accuracy. Each eviction in our city is associated with a specific municipal policy, not with a person of colour or an immigrant. Planners channel the developers into the poorest and most affordable areas because that’s where profit margins are the highest. And why would Vision Vancouver care about maximizing the profit margins? Because the developers fund the entire corrupt game, that’s why.

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Notes

[1] An article by Frances Bula, which rightly focuses on investor ownership, opens with lines that are characteristically misleading for average readers: “Nearly a quarter of condos in Vancouver are empty or occupied by non-residents…” The sentence continues with a tacked-on caveat about “some areas of downtown.”

[2] Rennie continues: “They’re going to start spreading the wealth and helping their kids while they’re still alive because their kids can’t do it without them. That’s going to be a lot of money that’s going to move around the region.”

[3] Overleveraging occurs frequently through “remortgaging,” whereby one mortgage is use to borrow money for a second mortgage. Current household debt in Canada has risen to new heights, reaching 163%.

[4] Mike Howell, “Mayor, housing minister build tight bond,” The Vancouver Courier, June 10, 2010

12 Responses to Empty Condos and foreign investors: Sign of the times or synonyms for racism?

  1. Sid Tan says:

    thanks for this nathan… my feeling after read, there’s a developers’ party happening and low income people not invited. brought to you by vision vancouver who masterfully gutted cope so “progressives” could do the dirty work…….

  2. While I take the general point, certainly about elites using “foreign investment” to cover up their own profiteering sins, there’s some sloppiness here.
    For instance, “immigrants are being rounded up in raids by the Canadian Border Service, producing a culture of fear”–true enough and I really dislike the way immigration policy is being run. But as far as I know, none of those people being rounded up are Chinese immigrants. They seem to be mostly Mexican. Roma are also of course being targeted by the federal Conservatives, among others. Not the Chinese so much. So I’m not sure where this fits into a “Chinese are under attack” narrative.
    Also, “From listening to Sutherland one would not know, furthermore, that Vancouverites living in poverty are mostly people of colour, more than half of whom speak Chinese as a first language (54%).” There’s a link in this sentence, which in turn leads to a link, which in turn does not work. So I was unable to find out first hand what it was intended to mean. That is, is the sentence meant to say that 54% of Vancouverites living in poverty speak Chinese as a first language? Or does it say that of the people of colour in poverty, 54% speak Chinese as a first language? Both of those seem somewhat unlikely to me, to be honest. Or does it rather say that (a)most of the poor in Vancouver are people of colour, and (b)54% of the people of colour in Vancouver speak Chinese as a first language? Note that this last interpretation says nothing whatsoever about what proportion of the poor speak Chinese as a first language–it could be none at all and the sentence would still be technically accurate. The sentence is confusing and may well be quite misleading.
    Really, of all the minorities in the greater Vancouver area, those of Chinese origin or descent are in pretty much the best position to defend themselves. I worry much more about First Nations folks in particular, but even Sikhs, Africans, folks from the Middle East, in general groups of people of colour who really do catch a lot of grief and whose representation in the Vancouver area poor is probably proportionally rather greater than that of the Chinese.

    • Nate says:

      Sorry for the late reply to your comment. Your first point about Chinese workers not being targeted by the CBSA is untrue and I would point especially to the case of the Chinese miners earlier this year, who were deported almost immediately after the media singled them out. Chinese workers are just as likely as Mexican workers to experience an increasingly forceful CBSA and media, and I don’t know why you feel the need to claim Chinese workers are exempt from the process. Many people are resistant to acknowledging that basic fact, and I attribute that to the ongoing one-sided characterizations of Chinese migrants as wealthy investors.

      Your second point is about the Poverty Profile link that no longer exists online. The reason the link to the report is down is because the Federal government has axed the National Council on Welfare, the author of the report. However, the agency might be on its way back to life (see article here: http://www.thestar.com/opinion/commentary/2013/05/29/defunct_social_agency_comes_back_to_life_goar.html). You seem to doubt the findings of the report. I won’t spend my time here re-iterating those findings because they are listed in the article. If you want to find the original report itself with the statistical breakdown: National Council of Welfare Reports, “Poverty Profile: A Snapshot of Racialized Poverty in Canada” (2012)

      • As I made fairly clear, I can’t tell from your article what the findings of the report are–your statement could mean any one of a number of things, which in turn would imply many different things about the state of poverty among those for whom Chinese is a first language. If you want to clarify what you say the report says, then maybe I can say whether I believe that (a) the report says that and (b) whether it is accurate if it does and (c) whether what you say it says implies what you indicate it implies. At the moment, I just don’t know. Sorry, but what you list in the article is highly ambiguous and I can’t tell what it actually means, although it’s fairly clear what you take it to imply.

  3. Ken says:

    I would like to address some facts in this article that may be misleading to readers:

    #1. Yes, income/corporate taxes are low. Is some of this money going into housing? As you say, “certainly”, but you do not address how much is going in, and if this contributes to increase in housing prices. Why not provide some context, maybe some studies on income effect on real estate investment spending.

    #2. Condo’s aren’t as empty as reported. So?

    #3. 96% of assessments were sent out within Canada. So? Do you know that there are rules regarding investment in China, that money cannot be freely moved out of the country? Perhaps those Chinese businessmen who are working in China and investing in Canada as a capital security measure don’t want it publicly known that they do so. Do you think it might be possible that Chinese buyers own multiple properties, with the wife living in one where they get the assessments for the others sent to?

    #4. Yuppies! The root of all evil, moving from the west side are contributing to price increases. Let’s talk about why they are moving east away from their childhood neighborhood. Ever been to a west side school recently? A teacher recently remarked to me that my old high-school in Kitsilano is now dubbed “The last white bastion”.

    #5. That over leveraged mortgages are contributing to housing price increase. do you have any statistics on this? other than that in Canada (never-mind that were talking about lower mainland here) has reached 163%? This doesn’t explain the difference in prices between say Calgary and Vancouver.

    But hey, I’m with you on that Chinese folk are taking the racism bullet a little too frequently as of recent. Other factors are also at work in this game of prices (housing supply, desirability) And it’s not their fault, they were allowed to buy, so they did. But your article is misleading in that readers (and at least one Facebook user I know) are likely taking away from it that Chinese investment has not contributed significantly to housing price increases in hotspots like Vancouver and Richmond and the resulting spillover. PS.) I work in the financial industry and see the Chinese money phenomenon first hand – they’re excellent clients as a matter of fact.

    • Pepero says:

      Hi I read your comment and on point #4 I’m a little confused over why you think people are moving to the east side.

  4. Ivan says:

    One question is why Vision supports the racist populist thesis that “foreign capital” is to blame for the housing crisis in Vancouver, another is why it is populist to begin with. I think this thesis lets more than Vision off the hook but covers for the Canadian bourgeoisie, specifically the real estate investor branch of this class here in Vancouver.

    In the history of Canadian social democracy and left movements there has been a split since the 1970s over a perverted national question; whether Canada remains a colony of a stronger state or if it is an imperialist state in its own right. This question used to hinge on interpretations of the stats on the ownership of productive forces. The implications were: if Canada is still a colony of the US then a “Canadian national” revolution (workers allied with capitalists) would be progressive and a necessary prelude to a domestic overturn of capital. If Canada is a fully realized bourgeoisie (and therefor imperialist) state then an alliance with the bourgeoisie would be reactionary; therefor focus on fighting the local rulers.

    See the Waffle (caucus within the NDP) Manifesto of 1969. Point 5 reads: “The major threat to Canadian survival today is American control of the Canadian economy. The major issue of our times is not national unity but national survival, and the fundamental threat is external, not internal.” http://www.socialisthistory.ca/Docs/Waffle/WaffleManifesto.htm

    This discussion was out in the open during the US-driven invasions of Afghanistan and Iraq. Many on the left referred to then-PM Chretien as a servant of US empire in the invasion of Afghanistan and as resisting the same empire for not invading Iraq. Others argued that Canada had its own political and economic reasons for invading Afghanistan, and for not invading Iraq.

    These theoretical questions are not discussed as openly as they were 20 years ago but I think they remain unresolved in the left in Canada. Some in the left are more comfortable blaming “foreign” than “Canadian” capital and are unwilling to question whether these national designations are useful at all. And, as when the question was over the main economic units of the 1970s, factories and resources, there is also an aspect of one side defaulting towards lowest-common-denominator populist ideas in the working class.

    I maintain that Canada is a fully realized bourgeois-imperialist state and should be fought directly and as the first priority of social justice struggle on this territory. This focus on Canada-as-the-problem is necessary to understand and tackle the forces of transnational capital (including that based in Canada) in the Vancouver real estate market and even more obviously to deal with Canadian colonialism and imperialism. In all these cases Canada is the problem, no matter where the money directly comes from.

    Specifically and ultimately, to end the housing crisis in Vancouver we need to end the for-profit investment climate that overwhelms the housing needs of residents of Vancouver.

    I apologize for the clumsy formulations in this post, I’m posting quickly rather than dwell on it.

    • Not sure I think that’s an “or” question. Canada is certainly engaged in imperialist behaviours of its own, take for instance the lamentable international record of Canadian mining companies both in terms of human rights and meddling in the politics of third world countries. I understand they were complicit in the coup in Honduras, for instance.
      But that doesn’t mean we aren’t still colonized by the US. Clearly we are. So much of our business consists of branch plants. Even the freaking Hudson’s Bay Company, our enduring legacy of British colonialism, the epitome of Canada before there ever was a Canada, is now owned by the US!

      But in any case I’m skeptical of the whole notion that a colonized country is best off with a worker-capitalist alliance against foreign dominance. Why should that work? A colonized country’s capitalists are typically a bunch of compradors; Canada’s certainly are–we have a branch-plant economy dominated by branch-plant firms presided over by branch-plant capitalists with no real loyalty to Canada as a country. Even the ones running locally controlled stuff tend to have a globalist mentality and no interest in a national project. These people are not going to ally with the Canadian working class against US imperialist dominance–they ARE US imperialist dominance. Imagining a popular leftist movement could somehow cut deals with them strikes me as folly.
      The other problem with such a notion is that we’re not centralists any more. No modern left mass movement is going to tamely tag along behind some benevolent leadership as they cut deals with the bosses. Look at all the most vital movements out there–Venezuela, Greece, Spain and so on. They’re all horizontal, made up of tons of activists networking and educating themselves, with their own ideas, all struggling in more or less the same direction but in no way obedient to central leadership. If we could build such a movement in Canada, there is no way it would follow anyone brokering deals with the banksters; to the extent that it did, it would lose its vitality, a recipe for defeat.

      The most successful leftist change in a colonized country to date would be in Venezuela, which is clearly not characterized by an alliance with the local capitalist class. That idea might have been relevant in 1969 although I have my doubts that it was ever the smartest notion. But I think events have passed it by.

  5. Cake says:

    First gotta say this article is spot on, cause there is much need of words that clarify the ways Vancouver is expensive due to “FOREIGN INVESTMENT” (which might as well be short-hand for “NOT WHITE PEOPLE – AHHHHHHH!”).

    I think this narrative -can- be complicated some though. Much of my immediate family still lives in Shaughnessy, and in the recent years they’ve seen their friends & neighbors sell their homes for absurd amounts of money to high-net worth immigrants from China. There have been homes sold over weekends in bidding wars that end in the multiple millions, and even Robyn Woodward (one of the heirs to the Woodward fortune) flipped her house for close to $4 million after buying it only a few years earlier, renovating, and then quickly selling it when the opportunity arose to cash in on the surge of investment from new high-net worth immigrants. [1]

    This isn’t to say we should be pointing any fingers at “THE CHINESE” though, because (much like any population) not everyone is totally fucking loaded. As your article already states, being of Chinese descent does NOT increase your economic privileges in Vancouver on average, especially compared to the white kids (like the ones who are pushing the lower-income Chinese community out of Strathcona). I do think we need to talk about though the way high-net worth individuals are fast-tracked for immigration to Canada though, and how this is used to the benefit of well established elites, because i can say for a FACT that you are correct: people from the West-side ARE buying investment properties and condos for their kids in East-van. However, in some cases, this is being done through the sale of their property in already affluent areas.

    Granted, I do think the role of new resident, high-net worth individuals to Vancouver is highly overstated as well, limited to extremely specific neighborhoods, and is often characterized by irrational racism, cause i mean… wait, since when does someone like Robyn Woodward NEED to capitalize further than her family already has? Can’t she find a more progressive use for her assets? And don’t families like the Aquillinis own like… 99% of the farmland out in Pitt Meadows? Why aren’t we talking about THAT, cause in terms of take-over that is the kind of monopoly we should REALLY be concerned about. When it comes to immigrants & “foreign investment” though? We do need to talk about the way the government has open arms for the wealthy of other countries, but nothing but temporary worker visas for working-class people.

    [1] Woodward house that was sold – http://www.erinmulhern.com/Properties.php/Details/705/details

    (And for confirmation of Robyn Woodward having lived there: http://www.sha.org/about/committees.cfm)

  6. Nicholas Ellan says:

    Generally I agree with the analysis here. One thing though: I don’t think “colonized by the US” really means what it implies, especially if you are focused on issues of corporate ownership. Given the global consolidation of capital, trending towards fewer and fewer multinational megacorps, simple arithmetic means that our companies will necessarily be swallowed up 10 times each time they themselves swallow. And American companies are that in origin, maybe identity, and physical location of property; but on paper they’re based out of wherever they benefit most from the law; in some cases Ireland, in others Vancouver, in others Delaware. And the current takeover of federal politics is very much a made-in-Canada movement, though clearly not one to shy away from cross-national partnerships.

  7. Frank Ducote says:

    That was UBC professor Tsur Somerville on the panel, not Jim Sutherland.

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